10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

o 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 incorporation or organization)	(IRS Employer Identification No.)
225 North Shore Drive
Pittsburgh, Pennsylvania	15212
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (412) 553-5700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, no par value	New York Stock Exchange
Preferred Stock Purchase Rights	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Act).

Yes  ý   No  o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes  o   No  ý

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  ý   No  o

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 or this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b–2 of the Act).

Large accelerated filer  ý   Accelerated filer  o   Non-accelerated filer  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes  o   No  ý

The aggregate market value of voting stock held by non-affiliates of the registrant
as of June 30, 2005:  $4,062,941,316

The number of shares outstanding of the issuer’s classes of common stock
as of January 31, 2006:  119,849,572

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III, portions of Items 10, 11, 12, and 14 are incorporated by reference from the Proxy Statement for the Company’s Annual Meeting of Stockholders to be held on April 12, 2006, which Proxy Statement will be filed with the Commission within 120 days after the close of the Company’s fiscal year ended December 31, 2005, except for the Stock Performance Graph, Report of the Compensation Committee on Executive Compensation, and Report of the Audit Committee.

TABLE OF CONTENTS

	Glossary of Commonly Used Terms, Abbreviations, and Measurements
PART I
Item 1	Business
Item 1A	Risk Factors
Item 1B	Unresolved Staff Comments
Item 2	Properties
Item 3	Legal Proceedings
Item 4	Submission of Matters to a Vote of Security Holders
	Executive Officers of the Registrant
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6	Selected Financial Data
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A	Quantitative and Qualitative Disclosures About Market Risk
Item 8	Financial Statements and Supplementary Data
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A	Controls and Procedures
Item 9B	Other Information
PART III
Item 10	Directors and Executive Officers of the Registrant
Item 11	Executive Compensation
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13	Certain Relationships and Related Transactions
Item 14	Principal Accounting Fees and Services
PART IV
Item 15	Exhibits, Financial Statement Schedules
	Index to Financial Statements Covered by Report of Independent Registered Public Accounting Firm
	Index to Exhibits
	Signatures
	Certifications

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Glossary of Commonly Used Terms, Abbreviations, and Measurements

Commonly Used Terms

Appalachian Basin – The area of the United States comprised of those portions of West Virginia, Pennsylvania, Ohio, Maryland, Kentucky and Virginia that lie at the foot of the Appalachian Mountains.

basis –When referring to natural gas, the difference between the futures price for a commodity and the corresponding sales price at various regional sales points. The differential commonly is related to factors such as product quality, location and contract pricing.

Btu –One British thermal unit – a measure of the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit.

cash flow hedge –A derivative instrument that complies with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, and is used to reduce the exposure to variability in cash flows from the forecasted physical sale of gas production whereby the gains (losses) on the derivative transaction are anticipated to offset the losses (gains) on the forecasted physical sale.

collar –A financial arrangement that effectively establishes a price range for the underlying commodity. The producer bears the risk of fluctuation between the minimum (floor) price and the maximum (ceiling) price.

development well –A well drilled into a known producing formation in a previously discovered field.

exploratory well –A well drilled into a previously untested geologic prospect to determine the presence of gas or oil.

farm tap – Natural gas supply service in which the customer is served directly from a well or gathering pipeline.

futures contract –An exchange-traded legal contract to buy or sell a standard quantity and quality of a commodity at a specified future date and price.

gas –All references to “gas” in this report refer to natural gas.

gross –“Gross” natural gas and oil wells or “gross” acres equal the total number of wells or acres in which the Company has a working interest.

heating degree days – Measure used to assess weather’s impact on natural gas usage calculated by adding the difference between 65 degrees Fahrenheit and the average temperature of each day in the period (if less than 65 degrees Fahrenheit). Each degree by which the average temperature falls below 65 degrees Fahrenheit represents one heating degree day.

hedging –The use of derivative commodity and interest rate instruments to reduce financial exposure to commodity price and interest rate volatility.

margin deposits – Funds or good faith deposits posted during the trading life of a futures contract to guarantee fulfillment of contract obligations.

margin call – A demand for additional or variation margin deposits when futures prices move adversely to a hedging party’s position.

net –“Net” gas and oil wells or “net” acres are determined by summing the fractional ownership working interests the Company has in gross wells or acres.

proved reserves – Reserves that, based on geologic and engineering data, appear with reasonable certainty to be recoverable in the future from known oil and gas reserves under existing economic and operating conditions.

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proved developed reserves – Proved reserves which can be expected to be recovered through existing wells with existing equipment and operating methods.

proved undeveloped reserves – Proved reserves that are expected to be recovered from new wells on undrilled proved acreage or from existing wells where a relatively major expenditure is required for completion.

reservoir –A porous and permeable underground formation containing a natural accumulation of producible natural gas and/or oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.

transportation – Moving gas through pipelines on a contract basis for others.

throughput –Total volumes of natural gas sold or transported by an entity.

working interest –An interest that gives the owner the right to drill, produce and conduct operating activities on a property and receive a share of any production.

Abbreviations

APB No. 18 – Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock”

APB No. 25 – Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”

EITF No. 02-3 – Emerging Issues Task Force No. 02-3, “Recognition and Reporting of Gains and Losses on Energy Trading Contracts under EITF Issues No. 98-10 and 00-17”

FASB – Financial Accounting Standards Board

FERC – Federal Energy Regulatory Commission

FSP FAS 106-2 – FASB Staff Position 106-2, “Accounting and Disclosure Requirements Related to Medicare Prescription Drug, Improvement and Modernization Act of 2003”

FIN 45 – FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others – an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34”

IRC – Internal Revenue Code of 1986

IRS – Internal Revenue Service

NYMEX – New York Mercantile Exchange

OTC – Over the Counter

PA PUC – Pennsylvania Public Utility Commission

SEC – Securities and Exchange Commission

SFAS – Statement of Financial Accounting Standards

SFAS No. 19 – Statement of Financial Accounting Standards No. 19, “Financial Accounting and Reporting by Oil and Gas Producing Companies”

SFAS No. 69 – Statement of Financial Accounting Standards No. 69, “Disclosures About Oil and Natural Gas Producing Activities”

SFAS No. 71 – Statement of Financial Accounting Standards No. 71,“Accounting for the Effects of Certain Types of Regulation”

SFAS No. 87 – Statement of Financial Accounting Standards No. 87, “Employers’ Accounting for Pensions”

SFAS No. 88 – Statement of Financial Accounting Standards No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits”

SFAS No. 106 – Statement of Financial Accounting Standards No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”

SFAS No. 109 – Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”

SFAS No. 115 – Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities”

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SFAS No. 123 – Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”

SFAS No. 123(R) – Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment”

SFAS No. 128 – Statement of Financial Accounting Standards No. 128, “Earnings Per Share”

SFAS No. 133 – Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended

SFAS No. 143 – Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations”

SFAS No. 144 – Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”

SFAS No. 146 – Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”

SFAS No. 148 – Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation –Transition and Disclosure – an amendment of FASB Statement No. 123”

Measurements

Bbl    = barrel

Bcf    = billion cubic feet

Bcfe   = billion cubic feet of natural gas equivalents

Mcf    = thousand cubic feet

Mcfe   = thousand cubic feet of natural gas equivalents

MMBtu  = million British thermal units

MMcf   = million cubic feet

MMcfe  = million cubic feet of natural gas equivalents

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PART I

Item 1.Business

Forward-Looking Statements

Disclosures in this Annual Report on Form 10-K contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Statements that do not relate strictly to historical or current facts are forward-looking and usually identified by the use of words such as “anticipate,” “estimate,” “forecasts,” “approximate,” “expect,” “project,” “intend,” “plan,” “believe” and other words of similar meaning in connection with any discussion of future operating or financial matters. Without limiting the generality of the foregoing, forward-looking statements contained in this report include the matters discussed in the sections captioned “Outlook” in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the expectations of plans, strategies, objectives, and growth and anticipated financial and operational performance of the Company and its subsidiaries, including guidance regarding the Company’s drilling and infrastructure development programs, production volumes, reserves, capital expenditures and earnings. 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 and results of the Company’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors.”

Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.

General

In this Form 10-K, references to “we,” “us,” “our,” “Equitable,” “Equitable Resources” and “the Company” refer collectively to Equitable Resources, Inc. and its consolidated subsidiaries, unless otherwise specified.

Equitable Resources, Inc. is an integrated energy company, with an emphasis on Appalachian area natural gas supply activities including production and gathering and natural gas distribution and transmission. The Company and its subsidiaries offer energy (natural gas, and a limited amount of natural gas liquids and crude oil) products and services to wholesale and retail customers through two business segments: Equitable Utilities and Equitable Supply. In December 2005, the Company discontinued and sold the operations of its NORESCO segment, which provides energy efficiency solutions to customers including governmental, military, institutional, commercial and industrial end-users.

The Company was formed under the laws of Pennsylvania by the consolidation and merger in 1925 of two constituent companies, the older of which was organized in 1888. In 1984, the corporate name was changed to Equitable Resources, Inc.

The Company and its subsidiaries had approximately 1,250 employees at the end of 2005, of which 364 employees were subject to collective bargaining agreements. Although one union representing 13 employees has been operating without a contract since April 19, 2004, the Company believes that its employee relations are generally good.

The Company makes certain filings with the SEC, including its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments and exhibits to those reports, available free of charge through its website, http://www.eqt.com, as soon as reasonably practicable after they are filed with the SEC. The filings are also available through the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or by calling 1-800-SEC-0330. Also, these filings are available on the internet at http://www.sec.gov. The Company’s annual reports to shareholders, press releases and recent analyst presentations are also available on the Company’s website.

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Business Segments

Equitable Utilities

Equitable Utilities’ operations comprise the gathering, transportation, storage, distribution and sale of natural gas. Equitable Utilities has both regulated and nonregulated operations. The regulated group consists of the Company’s federally-regulated pipeline and storage operations and the state-regulated distribution operations, while the nonregulated group is involved in the non-jurisdictional marketing of natural gas, risk management activities for the Company and the sale of energy-related products and services. Equitable Utilities generated approximately 34% of the Company’s net operating revenues in 2005.

Distribution Operations

Equitable Utilities’ Distribution Operations are carried out by Equitable Gas Company (Equitable Gas), a division of the Company. The service territory includes southwestern Pennsylvania, municipalities in northern West Virginia and field line sales, also referred to as farm tap service, in eastern Kentucky and West Virginia. The Distribution Operations provide natural gas services to approximately 274,400 customers, comprising 255,600 residential customers and 18,800 commercial and industrial customers. Equitable Gas purchases gas through supply contracts from various sources including major and independent producers in the Gulf Coast, local producers in the Appalachian area and gas marketers (including an affiliate). Equitable Gas’ supply purchases include various pricing mechanisms, ranging from fixed prices to several different index-related prices.

Equitable Utilities’ distribution rates, terms of service, contracts with affiliates and issuance of securities are subject to comprehensive regulation by the PA PUC and the Public Service Commission of West Virginia. The field line sales rates in Kentucky are also subject to rate regulation by the Kentucky Public Service Commission. Equitable Gas also operates a small gathering system in Pennsylvania, which is not subject to comprehensive regulation.

In most cases, the Company must seek approval of one or more of these regulatory bodies prior to increasing (or decreasing) its rates. Currently, Equitable Gas passes through to its regulated customers the cost of its purchased gas and is allowed to recover a return in addition to its costs of operations. However, the Company’s regulators do not guarantee recovery and may require that certain costs of operation be recovered over an extended term. Equitable Gas has worked with, and continues to work with regulators to implement alternative performance-based rates. Equitable Gas’ tariffs for industrial and commercial customers allow for negotiated rates in appropriate circumstances. Equitable Gas has not filed a rate case since 1997, and its predominant approach to maximizing profits is cost control. Regulators periodically audit the Company’s compliance with applicable regulatory requirements. The Company is not aware of any significant non-compliance as a result of any completed audits.

Because most of its customers use natural gas for heating purposes, Equitable Gas’ revenues are seasonal, with approximately 72% of calendar year 2005 revenues occurring during the winter heating season (the months of January, February, March, November and December). Significant quantities of purchased natural gas are placed in underground storage inventory during off-peak season to accommodate higher demand during the winter heating season.

The Distribution Operations’ service territory is a relatively small geographic area, with a high percentage of gas users within a static population and economy. Management believes there are limited continuing growth opportunities in the service area, where competition exists with two other major local distribution companies.

Pipeline (Transportation and Storage) Operations

Equitable Utilities’ interstate pipeline operations are carried out by Equitrans, L.P. (Equitrans). These operations offer gas gathering, transportation, storage and related services to affiliates and third parties in the northeastern United States including, but not limited to, Dominion Resources, Inc., Keyspan Corporation, NiSource, Inc., PECO Energy Company and Amerada Hess Corporation. In 2005, approximately 76% of transportation volumes and approximately 80% of transportation revenues were from affiliates.

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Equitrans’ rates are subject to regulation by the FERC. Throughout 2004 and 2005, Equitrans has filed multiple rate case applications with the FERC which have been consolidated and seek to resolve several issues including establishing an appropriate return on the Company’s capital investments, the Company’s pension funding levels and accruing for post-retirement benefits other than pensions. A comprehensive and unopposed settlement to the consolidated rate case was submitted to the FERC on December 9, 2005. The settlement, if approved by the FERC, will allow the Company to fully recover its cost of providing service, including the recovery of fuel and lost and unaccounted-for gas, provide for the replenishment of migrated storage base gas, increase service flexibility and improve the Company’s ability to recover costs associated with maintaining pipeline integrity. Equitrans began charging the proposed rates, subject to refund, during the second half of 2004, consistent with orders issued by the FERC. Accordingly, Equitrans has established a reserve, which will be adjusted upon ultimate resolution of the consolidated rate case. The Company is awaiting a FERC order with respect to the settlement. While the Company expects that approval of the settlement agreement as filed will enable the Company to realize benefits in the future, the immediate impact on pipeline operating income is not expected to be significant.

While all of Equitrans’ firm transportation contracts are currently set to expire in either 2006 or 2007, the Company anticipates that the majority of the related volumes will be fully subscribed, and therefore, any resulting decrease in operating income is not expected to be significant.

Energy Marketing

Equitable Utilities’ unregulated marketing operations include the non-jurisdictional marketing of natural gas at Equitable Gas, marketing and risk management activities at Equitable Energy, LLC (Equitable Energy), and the sale of energy-related products and services by Equitable Homeworks, LLC. Services and products offered by the marketing operations include commodity procurement, delivery and storage, risk management and customer services for energy consumers including large industrial, utility, commercial and institutional end-users. Equitable Energy also engages in trading and risk management activities for the Company. The objective of these activities is to limit the Company’s exposure to shifts in market prices and to optimize the use of the Company’s assets.

The marketing operations are subject to regulation by the U.S. Commodity Futures Trading Commission, the FERC and the PA PUC.

Equitable Supply

Equitable Supply’s production business develops, produces and sells natural gas and, to a limited extent, crude oil and natural gas liquids, in the Appalachian region of the United States. Its gathering business consists of gathering the Company’s and third party gas and the processing of natural gas liquids. Equitable Supply generated approximately 66% of the Company’s net operating revenues in 2005.

Production

Equitable Supply’s production business, operating through Equitable Production Company and several smaller affiliates (collectively referred to as “Equitable Production”), is among the largest owners of proved natural gas reserves in the Appalachian Basin. Equitable Production currently operates approximately 12,000 producing wells in the Appalachian Basin.

The Company’s reserves are located entirely in the Appalachian Basin. The Appalachian Basin is characterized by wells with comparatively low rates of annual decline in production (wells generally produce for periods longer than 50 years), low production costs per well and high energy content. Once drilled and completed, wells in the Appalachian Basin typically have low ongoing operating and maintenance requirements. Many of the Company’s wells have been producing for decades, and in some cases since the early 1900’s. Management believes that virtually all of the Company’s wells are low risk development wells in part because they are drilled in areas known to be relatively productive and to relatively shallow depths ranging from 1,000 to 7,000 feet below the surface. Many of these wells are completed in more than one producing formation, including coal formations in certain areas, and production from these formations may be commingled.

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In 2005, Equitable Production drilled 455 gross wells (345 net wells) at a success rate of nearly 100%. Drilling was concentrated within Equitable’s core areas of southwestern Virginia, southeastern Kentucky and southern West Virginia. This activity resulted in an average of 17.2 MMcf per day of gas sales and proved developed reserve additions of approximately 100 Bcfe. The 100 Bcfe of proved developed reserve additions include approximately 30 Bcfe of proved developed extensions, discoveries and other additions that were not previously classified as undeveloped. The remaining 70 Bcfe of proved developed reserve additions relate to proved undeveloped reserves that were transferred to proved developed reserves.

Equitable Supply does not actively engage in activities to differentiate its products and therefore receives market-based pricing. The market price for gas located in the Appalachian Basin is generally higher than the price for gas located in the Gulf Coast, however, because of the relative differences in the supply of and demand for natural gas in those areas and in the relative cost to transport to customers in the northeastern United States. As a consequence, Equitable Production’s location provides a price advantage over companies located in the Gulf Coast region of the country.

The Company has noticed some relative value erosion of Mid-Atlantic basis as a result of new base load gas supplies. If the rate of supply growth in Appalachia exceeds the Mid-Atlantic region’s growth in demand, there may be further weakening in basis, especially in the summer months. At this time, this erosion has not had a significant impact on the Company’s results.

The combination of long-lived production, low drilling costs, high drilling completion rates at shallow depths and proximity to natural gas markets has resulted in a highly fragmented operating environment in the Appalachian Basin. Natural gas drilling activity has increased as suppliers in the Appalachian Basin attempt to take advantage of higher than normal natural gas prices. While increased activity can place constraints on capacity of labor, equipment, pipeline availability and other resources in the Appalachian Basin, it also provides opportunities for expansion of natural gas gathering activities and potential for higher quality rigs and labor providers in the future.

Equitable Supply hedges a portion of its forecasted natural gas production and third party purchases and sales at specified prices for a specified period of time. The Company’s hedging strategy and information regarding its derivative instruments are outlined in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” and in Notes 1 and 3 to the Consolidated Financial Statements.

Gathering

Equitable Gathering derives its revenues from charges it assesses to customers on a gathering and production pipeline system in the Appalachian Basin. As of December 31, 2005, the system included approximately 8,500 miles of pipeline located throughout West Virginia, eastern Kentucky, southwestern Virginia and portions of Pennsylvania. Over 80% of the volumes through the pipeline system interconnect with three major interstate pipelines: Columbia Gas Transmission, East Tennessee Natural Gas Company and Dominion Transmission. The gathering system also maintains interconnects with Equitrans, the Company’s interstate transmission affiliate that affords access to natural gas markets in southwestern Pennsylvania and the northeastern United States. Maintaining these interconnects provides the Company with access to multiple markets and the flexibility to redirect deliveries when flow interruptions occur.

Gathered sales volumes for 2005 totaled 121.0 Bcf, of which approximately 57% related to the gathering of Equitable Production’s sales volumes, 34% related to third party volumes, and the remainder related to volumes in which interests were sold by the Company but which the Company continued to operate for a fee. Approximately 80% of the Company’s 2005 gathering revenues were from affiliates. Effective January 1, 2005, the Company reorganized its businesses in order to better identify the operating and capital costs associated with the gathering business. The information derived from this reorganization and upward pressure on operating costs resulting from the expansion of activity in the Appalachian Basin have led Equitable Gathering to determine that it is, in many cases, currently charging gathering rates which are below its cost of service. Equitable Gathering will pursue full recovery of its costs of providing services by increasing the rates charged to its customers.

Certain portions of the gathering system are subject to rate regulation by the FERC and the Company has sought to have rates established for those gathering systems as part of the consolidated rate case described under

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“Equitable Utilities – Pipeline (Transportation and Storage) Operations.”  The consolidated rate case includes the operations of gathering facilities that were recorded in Equitable Supply’s gathering operations during 2005, 2004 and 2003. Effective January 1, 2006, these gathering systems, which consist of 1,400 miles of pipeline and related facilities with approximately 13.3 Bcf of annual throughput, were transferred to Equitable Utilities for segment reporting purposes. The effect of the transfer is not material to the results of operations or financial position of the Equitable Utilities or Equitable Supply segments; segment results have not been restated for this transfer.

Competition in natural gas gathering is based mainly on gathering system capacity, price and location. Key competitors in Equitable Supply’s gathering operations include independent gas gatherers and integrated Appalachian energy companies. See “Outlook” under Equitable Supply’s section of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion of the Company’s strategy in regards to its midstream gathering operations.

Discontinued Operations

In December 2005, the Company sold the domestic operations of its NORESCO business segment for $82 million before customary purchase price adjustments of $2 million, which resulted in the Company receiving $80 million of proceeds in December 2005 for this sale. The sales price is also subject to future customary purchase price adjustments per the terms of the agreement. Also in December 2005, the Company entered into a purchase and sale agreement, subject to closing conditions, to sell the remaining interest in its investment in IGC/ERI Pan-Am Thermal Generating Limited for $2.5 million. This sale is expected to close in 2006 and as such, the Company considers the investment to be held for sale. As a result of these transactions, the Company has reclassified its financial statements for all periods presented to reflect the operating results of the NORESCO segment as discontinued operations.

Composition of Segment Operating Revenues

Presented below are operating revenues as a percentage of total operating revenues for each class of products and services representing greater than 10% of total operating revenues during the years 2003 through 2005.

	2005		2004		2003
Equitable Utilities:
Residential natural gas sales	26	%	29	%	32	%
Marketed natural gas	27	%	23	%	18	%
Equitable Supply:
Produced natural gas equivalents	30	%	29	%	28	%

Financial Information About Segments

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to the Consolidated Financial Statements for financial information by business segment.

Financial Information About Geographic Areas

Substantially all of the Company’s assets and operations are located in the continental United States.

Environmental

See Note 19 to the Consolidated Financial Statements for information regarding environmental matters.

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Item 1A. Risk Factors

Risks Relating to Our Business

In addition to the other information contained in this Form 10-K, the following risk factors should be considered in evaluating our business. Please note that additional risks not presently known to the Company or that are currently considered immaterial may also have a negative impact on the Company’s business and operations.

Natural gas price volatility may have an adverse effect on our revenue, profitability and liquidity.

Our revenue, profitability and liquidity depend on the price and demand for natural gas. The markets for natural gas are volatile and fluctuations in prices will affect our financial results. Recently, natural gas prices have increased substantially. Such price increases have subjected us, and may continue to subject us to, margin calls which require us to post significant amounts of cash collateral with our hedge counterparties. The cash collateral, which is interest-bearing, provided to our hedge counterparties is returned to us in whole or in part upon a reduction in forward market prices, depending on the amount of such reduction, or in whole upon settlement of the related hedged transaction. Increases in natural gas prices may also be accompanied by or result in increased well drilling costs, increased deferral of purchased gas costs for our distribution operations, increased production taxes, increased lease operating expenses, increased exposure to credit losses resulting from potential increases in uncollectible accounts receivable from our distribution customers and increased customer conservation or conversion to alternative fuels. Lower natural gas prices, increases in our estimates of development costs or changes to our production assumptions may result in our having to make downward adjustments to our estimated proved reserves and incur non-cash charges to earnings. Natural gas prices are affected by a number of factors beyond our control, which include: weather conditions; the supply of and demand for natural gas; national and worldwide economic and political conditions; the price and availability of alternative fuels; the proximity to, and availability of capacity on, transportation facilities; and government regulations, such as regulation of natural gas transportation, royalties and price controls.

We are dependent on our ability to cost-effectively access capital markets. Our inability to obtain capital on acceptable terms may adversely affect our business. A reduction in our debt issuer credit ratings could increase our borrowing costs.

We rely on access to both short-term debt markets and longer-term capital markets as a source of liquidity and to satisfy our capital requirements in excess of cash flow from our operations. Each of the agencies who periodically assign credit ratings on our debt has stated that our rating is based on their expectations with respect to certain financial performance measures and ratios. A rating may be subject to revision or withdrawal at any time by the assigning credit rating agency. Any inability to maintain our current credit ratings could affect, especially during times of uncertainty in the capital markets, our ability to raise capital on favorable terms which, in turn, could impact our ability to manage our business. Any downgrades in these ratings could have a negative impact on our liquidity, our access to capital markets and our costs of financing and could increase the amount of collateral required by our hedge counterparties. Capital market disruptions could also adversely affect our ability to access one or more financial markets.

Our need to comply with comprehensive, complex and sometimes unpredictable government regulations may increase our costs and limit our revenue growth, which may result in reduced earnings.

Significant portions of our gathering, transportation, storage and distribution businesses are subject to state and federal regulation including regulation of the rates which we may assess our customers. The agencies that regulate our rates may prohibit us from realizing a level of return which we believe is appropriate. These restrictions may take the form of imputed revenue credits, cost disallowances (including purchased gas cost recoveries) and/or expense deferrals. Additionally, we may be required to provide additional assistance to low income residential customers to help pay their bills.

We are subject to laws, regulations and other legal requirements enacted or adopted by federal, state and local, as well as foreign authorities relating to protection of the environment and health and safety matters, including those legal requirements that govern discharges of substances into the air and water, the management and disposal of

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hazardous substances and wastes, the clean-up of contaminated sites, groundwater quality and availability, plant and wildlife protection, restoration of drilling properties after drilling is completed, pipeline safety and work practices related to employee health and safety. Complying with these requirements could have a significant effect on our costs of operations and competitive position.

The rates of federal, state and local taxes applicable to the industries in which we operate, including production taxes paid by Equitable Supply, which often fluctuate, could be increased by the respective taxing authorities. In addition, the tax laws, rules and regulations that affect our business could change. Any such increase or change could adversely impact our cash flows and profitability.

The actual quantities and present value of our proved gas reserves may prove to be lower than we have estimated, which could negatively impact our long-term growth prospects.

The proved gas reserve information included in this Form 10-K represents only estimates calculated using gas prices in effect on the date indicated in the reports. Any significant price changes will have a material effect on the present value of our reserves. For example, an increase in gas prices of approximately $0.50 per Mcfe from those prices used to calculate our reserves would increase the present value of our proved reserves by approximately $322 million, and the same decrease in gas prices would decrease the present value of our proved reserves by the same amount.

Estimating underground accumulations of gas involves significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each reservoir. Future economic and operating conditions are uncertain which could cause a revision to our future reserve estimates. Estimates of economically recoverable gas reserves and of future net cash flows depend upon a number of variable factors and assumptions, including historical production from the area compared with production from other comparable producing areas and the assumed effects of regulations by governmental agencies. Some of these assumptions, including the 10% discount factor used to calculate discounted future net reserves in this Form 10-K, are required by the SEC.

Because all reserve estimates are to some degree subjective, each of the following items may differ materially from those assumed in estimating reserves: the quantities of gas that are ultimately recovered, the timing of the recovery of gas reserves, the production and operating costs incurred, the amount and timing of future development expenditures and the gas price received.

The amount and timing of actual future gas production and the cost and timing of our infrastructure development program are difficult to predict and may vary significantly from our estimates which may reduce our earnings.

Our future success depends on our ability to develop additional gas reserves that are economically recoverable and to transport the production from those reserves to market, and our failure to do so may reduce our earnings. In 2005, we expanded our drilling program, and we have subsequently announced further expansion. We have also announced a significant investment in transportation infrastructure (the Big Sandy Pipeline) which is intended to address a lack of capacity on and access to existing transportation pipelines as well as curtailments on such pipelines. Our drilling of development wells and our infrastructure development program can involve significant risks, including those related to timing and cost overruns and these risks can be affected by the availability of capital, leases, rigs and a qualified work force, as well as weather conditions, gas price volatility, government approvals, title problems, geology and other factors. In addition, we may not be able to obtain sufficient third party transportation contracts to recover the costs of our infrastructure development program. Drilling for natural gas can be unprofitable, not only from dry wells, but from productive wells that do not produce sufficient revenues to return a profit. Without continued successful development or acquisition activities, our reserves and revenues will decline as a result of our current reserves being depleted by production.

Our operations are weather sensitive.

Weather conditions directly influence the demand for natural gas, affect the price of energy commodities and may hinder our gathering, transportation and drilling operations. For example, mild winter temperatures can cause a

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decrease in the volume or affect the price of gas we sell in any year and colder winter temperatures can cause an increase in the amount or in the price of gas we sell in any year. In addition, severe weather, including hurricanes, can be destructive, causing natural gas prices to be volatile, our drilling operations to be curtailed, delayed or canceled, our gathering and transportation assets to be damaged and our operating expenses to increase.

We are subject to operating and litigation risks that may not be covered by insurance.

Our business’ operations are subject to all of the inherent hazards and risks normally incidental to the production, transportation, storage and distribution of natural gas. These risks could result in substantial losses due to personal injury and/or loss of life, severe damage to and destruction of property and equipment and pollution or other environmental damage. As a result, we are sometimes a defendant in legal proceedings and litigation arising in the ordinary course of business. There can be no assurance that insurance policies we maintain to limit our liability of such losses will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or that such levels of insurance will be available in the future at economical prices.

We may engage in acquisition and disposition strategies that involve a number of inherent risks, any of which may cause us not to realize anticipated benefits and may adversely affect our earnings, cash flows and results of operations.

We intend to continue to strategically position our business in order to improve our ability to compete. Acquisitions, joint ventures and other business combinations involve various inherent risks, such as assessing the value, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition or other transaction candidates; the potential loss of key personnel of an acquired business; our ability to achieve identified financial and operating synergies anticipated to result from an acquisition or other transaction; and unanticipated changes in business and economic conditions affecting an acquisition or other transaction. We may be unable to realize, or do so within any particular time frame, the cost reductions, cash flow increases or other synergies expected to result from such transactions. In addition, various factors including prevailing market conditions and the incursion of related contingent liabilities could negatively impact the benefits we receive from disposition transactions.

If we fail to achieve our strategic or financial goals in any acquisition or disposition transaction, it could have a significant adverse affect on our earnings, cash flows and results of operations. Furthermore, if we borrow money to finance an acquisition, our failure to achieve our stated goals could impact our ability to repay such borrowings or other borrowings and could weaken our financial condition.

See Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” for further discussion regarding the Company’s exposure to market risks, including the risks associated with our use of derivative contracts to hedge commodity prices.

Item 1B.Unresolved Staff Comments

There are no comments regarding any of the Company’s periodic or current reports filed under the Securities Exchange Act of 1934 that were received from the SEC staff more than 180 days before the fiscal year-end covered by this Form 10-K that remain unresolved at the time of this filing.

Item 2.Properties

Principal facilities are owned by the Company’s business segments, with the exception of various office locations and warehouse buildings, which are leased. A limited amount of equipment is also leased. The majority of the Company’s properties are located on or under (1) public highways under franchises or permits from various governmental authorities, or (2) private properties owned in fee, or occupied under perpetual easements or other rights acquired for the most part without examination of underlying land titles. The Company’s facilities are generally well maintained and, where necessary, are replaced or expanded to meet operating requirements.

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Headquarters. In May 2005, the Company completed the relocation of its corporate headquarters and other operations to a newly constructed office building, which the Company leases, located at the North Shore in Pittsburgh, Pennsylvania. As a result of this consolidation, the Company still maintains leases for properties previously used for its administrative operations that are not currently being utilized. The Company is actively searching for tenants to sublease these properties from the Company.

Equitable Utilities. This segment owns and operates natural gas distribution properties as well as other general property and equipment in western Pennsylvania, West Virginia and Kentucky. The segment also owns and operates underground storage, transmission and gathering facilities in Pennsylvania and West Virginia.

The distribution operations consist of approximately 4,100 miles of pipe in Pennsylvania, West Virginia and Kentucky. The interstate pipeline operations consist of approximately 1,500 miles of transmission, storage, and gathering lines and interconnections with five major interstate pipelines. The interstate pipeline system stretches throughout north central West Virginia and southwestern Pennsylvania. Equitrans has 15 natural gas storage reservoirs with approximately 496 MMcf per day of peak delivery capability and 57 Bcf of storage capacity of which 27 Bcf is working gas. These storage reservoirs are clustered, with 8 in northern West Virginia and 7 in southwestern Pennsylvania.

Equitable Supply. This segment currently has an inventory of approximately 3.3 million gross acres, approximately 72% of which is considered undeveloped, which encompasses nearly all of the Company’s acreage of proved developed and undeveloped natural gas and oil production properties. As of December 31, 2005, the Company estimated its total proved reserves to be 2,365 Bcfe, including proved undeveloped reserves of 692 Bcfe from approximately 2,515 gross proved undeveloped drilling locations (2,292 net proved undeveloped drilling locations) on properties the Company either owns or in which it holds a leasehold interest. No report has been filed with any federal authority or agency reflecting a 5% or more difference from the Company’s estimated total reserves. Additional information relating to the Company’s estimates of natural gas and crude oil reserves and future net cash flows is provided in Note 25 (unaudited) to the Consolidated Financial Statements. The gathering operations owns and operates approximately 8,500 miles of gathering pipelines and 179 compressor units comprising 109 compressor stations with approximately 117,000 horse power of installed capacity, as well as other general property and equipment. This segment’s production and gathering properties are located in the Appalachian Basin, specifically Kentucky, Pennsylvania, Virginia and West Virginia.

Natural Gas and Crude Oil Production:

	2005		2004		2003
Natural Gas:
MMcf produced	78,105		72,226		69,422
Average well-head sales price per Mcfe sold (net of hedges)	$	5.13	$	4.45	$	3.91
Crude Oil:
Thousands of Bbls produced	108		83		83
Average sales price per Bbl	$	53.07	$	37.38	$	26.08

Average production cost, including severance taxes (lifting cost), of natural gas and crude oil during 2005, 2004, and 2003 was $0.771, $0.583, and $0.499 per Mcfe, respectively.

	Natural Gas	Oil
Total productive wells at December 31, 2005:
Total gross productive wells	11,932	23
Total net productive wells	8,991	18

Total acreage at December 31, 2005:
Total gross productive acres	917,080
Total net productive acres	862,055
Total gross undeveloped acres	2,403,302
Total net undeveloped acres	2,249,544

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Number of net productive and dry exploratory and development wells drilled:

	2005	2004	2003
Exploratory wells:
Productive	—	—	—
Dry	—	—	—
Development wells:
Productive	344.2	246.5	354.8
Dry	1.0	—	—

Substantially all of Equitable Supply’s sales are delivered to several large interstate pipelines on which the Company leases capacity. These pipelines are subject to periodic curtailments for maintenance and repairs.

Equitable Supply leases office space in Charleston, West Virginia. The segment also leases compressors in West Virginia, Virginia and Kentucky and other office space and equipment in Pennsylvania, West Virginia, Virginia and Kentucky that is not significant to the operation of the segment.

Item 3.Legal Proceedings

In the ordinary course of business, various legal claims and proceedings are pending or threatened against the Company. While the amounts claimed may be substantial, the Company is unable to predict with certainty the ultimate outcome of such claims and proceedings. The Company has established reserves for pending litigation, which it believes are adequate, and after consultation with counsel and giving appropriate consideration to available insurance, the Company believes that the ultimate outcome of any matter currently pending against the Company will not materially affect the financial position of the Company.

Item 4.Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of the Company’s security holders during the last quarter of its fiscal year ended December 31, 2005.

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Executive Officers of the Registrant (as of February 22, 2006)

Name and Age	Current Title (Year Initially Elected an Executive Officer)	Business Experience
John A. Bergonzi (53)	Vice President and Corporate Controller (January 2003)	Elected to present position January 2003; Corporate Controller and Assistant Treasurer from December 1995 to December 2002.
Philip P. Conti (46)	Vice President and Chief Financial Officer (August 2000)	Elected to present position January 2005, also Treasurer until January 2006; Vice President, Finance and Treasurer from August 2000 to January 2005.
Randall L. Crawford (43)	Vice President (January 2003)	Elected to present position January 2003; President, Equitable Gas Company from January 2003 to present; Executive Vice President, Equitable Gas Company from November 2000 to December 2002.
Murry S. Gerber (52)	Chairman, President and Chief Executive Officer (June 1998)	Elected to present position May 2000; President and Chief Executive Officer from June 1, 1998 to present.
Joseph E. O’Brien (53)	Vice President (January 2001)	Elected to present position January 2001; President, NORESCO, LLC from January 2000 to June 2005.
Johanna G. O’Loughlin (59)	Senior Vice President, General Counsel and Secretary (December 1996)	Elected to present position January 2002; Vice President, General Counsel and Secretary from May 1999 to January 2002.
Charlene Petrelli (44)	Vice President, Human Resources (January 2003)	Elected to present position January 2003; Director of Corporate Human Resources from October 2000 to December 2002.
David L. Porges (48)	Vice Chairman and Executive Vice President, Finance and Administration (July 1998)	Elected to present position January 2005; Executive Vice President and Chief Financial Officer from February 2000 to January 2005.
Diane L. Prier (46)	Vice President (December 2004)	Elected to present position December 2004; President, Equitable Production Company from December 2004 to present; President, Williams Alaska Petroleum, Inc. (a subsidiary of The Williams Companies, a company engaged in natural gas gathering, storage, processing and transportation, as well as oil and gas exploration and production) from August 2001 to April 2004; Vice President - Rockies Midstream Operations, The Williams Companies from March 1998 to July 2001.

Messrs. Gerber and Porges have executed employment agreements with the Company. All executive officers serve at the pleasure of the Company’s Board of Directors. Officers are elected annually to serve during the ensuing year or until their successors are chosen and qualified.

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PART II

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s common stock is listed on the New York Stock Exchange. The high and low sales prices reflected in the New York Stock Exchange Composite Transactions, and the dividends declared and paid per share, are summarized as follows (in U.S. dollars per share):

	2005 (a)						2004 (a)
	High		Low		Dividend		High		Low		Dividend
1st Quarter	$	30.62	$	27.89	$	0.19	$	22.46	$	21.05	$	0.15
2nd Quarter	34.42		28.16		0.21		25.88		22.00		0.19
3rd Quarter	39.90		34.01		0.21		27.25		24.95		0.19
4th Quarter	41.18		34.51		0.21		30.59		26.68		0.19

(a)Adjusted to reflect the two-for-one stock split effective September 1, 2005.

As of February 15, 2006, there were 4,182 shareholders of record of the Company’s common stock.

The amount and timing of dividends is subject to the discretion of the Board of Directors and depends on business conditions, the Company’s results of operations and financial condition and other factors. Based on currently foreseeable market conditions, the Company anticipates that comparable dividends will be paid on a regular quarterly basis.

The following table sets forth the Company’s repurchases of equity securities registered under Section 12 of the Exchange Act that have occurred in the three months ended December 31, 2005.

Period	Total number of shares (or units) purchased (a)	Average price paid per share		Total number of shares (or units) purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (b)
October 2005 (October 1 – October 31)	3,591	$	36.57	—	9,385,400
November 2005 (November 1 – November 30)	423,483	$	37.57	418,200	8,967,200
December 2005 (December 1 – December 31)	1,055,036	$	37.35	581,800	8,385,400
Total	1,482,110			1,000,000

(a)Includes 469,685 shares withheld to cover tax withholdings in connection with the December 2005 payout of all amounts previously deferred and accrued in the Equitable Resources, Inc. Employee Deferred Compensation Plan and Equitable Resources, Inc. 2005 Employee Deferred Compensation Plan and 12,425 shares for Company-directed purchases made by the Company’s 401(k) plans. All other purchases were open market purchases made pursuant to the Company’s publicly disclosed repurchase program. The Company periodically enters into “10b5-1 plans,” or trading plans, to allow for continuance of its share repurchase program through earnings and other blackout periods.

(b)Equitable’s Board of Directors previously authorized a share repurchase program with a maximum of 50.0 million shares and no expiration date. The program was initially publicly announced on October 7, 1998, with subsequent amendments announced on November 12, 1999, July 20, 2000, April 15, 2004, and July 13, 2005.

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Item 6.Selected Financial Data

	As of and for the year ended December 31, (a)
	2005		2004		2003		2002		2001
	(Thousands, except per share amounts)
Operating revenues	$	1,253,724	$	1,045,183	$	876,574	$	878,961	$	951,955
Income from continuing operations before cumulative effect of accounting change (b)	$	258,574	$	298,790	$	165,750	$	145,731	$	149,483
Income from continuing operations before cumulative effect of accounting change per share of common stock (c)
Basic	$	2.14	$	2.42	$	1.34	$	1.16	$	1.16
Diluted	$	2.09	$	2.37	$	1.31	$	1.14	$	1.13
Total assets	$	3,342,285	$	3,205,346	$	2,948,073	$	2,440,396	$	2,520,078
Long-term debt	$	766,434	$	626,434	$	646,934	$	471,250	$	271,250
Preferred trust securities	$	—	$	—	$	—	$	125,000	$	125,000
Cash dividends declared per share of common stock (c)	$	0.820	$	0.720	$	0.485	$	0.335	$	0.315

(a)Amounts have been reclassified to reflect the operating results of the NORESCO segment as discontinued operations for all periods presented.

(b)The year ended December 31, 2003, excludes the negative cumulative effect of an accounting change of $3.6 million related to the adoption of SFAS No. 143. The year ended December 31, 2002, excludes the negative cumulative effect of accounting change of $5.5 million related to the adoption of SFAS No. 142 and income from discontinued operations of $9.0 million related to the sale of the Company’s natural gas midstream operations.

(c)Per share amounts have been adjusted for the two-for-one stock split effected on September 1, 2005, for all years presented.

See Item 1A, “Risk Factors,” Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 4 and 5 to the Consolidated Financial Statements for other matters that affect the comparability of the selected financial data as well as uncertainties that might affect the Company’s future financial condition.

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Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Results of Operations

Equitable’s consolidated income from continuing operations before cumulative effect of accounting change for 2005 was $258.6 million, or $2.09 per diluted share, compared with $298.8 million, or $2.37 per diluted share, for 2004, and $165.8 million, or $1.31 per diluted share, for 2003.

The $40.2 million decrease in income from continuing operations before cumulative effect of accounting change from 2004 to 2005 was primarily the result of several non-operational factors. The Company recorded a gain in 2004 as a result of the Westport Resources Corporation (Westport)/Kerr-McGee Corporation (Kerr-McGee) merger in the second quarter of 2004 as well as a gain on the sale of 0.8 million Kerr-McGee shares subsequent to the merger. These gains were partially offset by an expense related to the Company’s charitable contribution of 0.4 million Kerr-McGee shares to the Equitable Resources Foundation, Inc., a community-giving foundation, in 2004. Income from continuing operations before cumulative effect of accounting change in 2005 included a significant gain from the sale of all of the Company’s remaining Kerr-McGee shares, which partially offset the impact of the 2004 items. The net impact on income from continuing operations before income taxes and cumulative effect of accounting change of these four items was a $91.7 million decrease from 2004 to 2005.

Operating income increased $54.1 million from 2004 to 2005 as a result of higher realized selling prices, an increase in sales volumes from production and increased revenues from storage asset optimization opportunities. These increases were offset in some part by increased operating costs resulting primarily from higher natural gas prices and sales volumes, increased incentive expenses and impairment charges related to the Company’s office consolidation.

The Company’s effective tax rate for its continuing operations for the year ended December 31, 2005, was 37.2% compared to 34.2% for both the year ended December 31, 2004, and the year ended December 31, 2003. The increase in the Company’s effective tax rate was primarily the result of tax benefit disallowances under Section 162(m) of the IRC. See Note 6 to the Consolidated Financial Statements.

The 2004 income from continuing operations before cumulative effect of accounting change increased from 2003 primarily due to the gain related to the Westport/Kerr-McGee merger. Higher realized selling prices, an increase in sales volumes from production and the proceeds received from an insurance settlement also helped to improve 2004 earnings. The improved 2004 earnings were partially offset by an increase in incentive expenses, the costs to settle the cash balance portion of a defined benefit pension plan in 2004, decreased gains from the sale of available-for-sale securities in 2004 as compared to 2003, an increase over the prior year in charitable foundation contribution expense, the loss on a 2004 amendment of the Company’s prepaid forward contract and warmer weather in 2004.

Business Segment Results

Business segment operating results are presented in the segment discussions and financial tables on the following pages. Operating segments are evaluated on their contribution to the Company’s consolidated results based on operating income, equity in earnings of nonconsolidated investments, minority interest and other income, net. Interest expense and income taxes are managed on a consolidated basis. Headquarters’ costs are billed to the operating segments based upon a fixed allocation of the headquarters’ annual operating budget. Differences between budget and actual headquarters expenses are not allocated to the operating segments. Certain performance-related incentive costs, pension costs and administrative costs totaling $48.0 million, $45.8 million and $20.4 million in 2005, 2004 and 2003, respectively, were not allocated to business segments. The increase in unallocated expenses from 2003 to 2004 was primarily related to increased long-term incentive expenses.

The Company has reconciled each segment’s operating income, equity in earnings of nonconsolidated investments, excluding Westport, minority interest and other income, net to the Company’s consolidated operating income, equity in earnings of nonconsolidated investments, excluding Westport, minority interest and other income, net totals in Note 2 to the Consolidated Financial Statements. Additionally, these subtotals are reconciled to the Company’s consolidated net income in Note 2. The Company has also reported the components of each segment’s

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operating income and various operational measures in the sections below, and where appropriate, has provided information describing how a measure was derived. Equitable’s management believes that presentation of this information is useful to management and investors in assessing the financial condition, operations and trends of each of Equitable’s segments without being obscured by the financial condition, operations and trends for the other segments or by the effects of corporate allocations. In addition, management uses these measures for budget planning purposes.

Equitable Utilities

Overview

Equitable Gas continues to work with state regulators to shift the manner in which costs are recovered from traditional cost of service rate making to performance-based rate making. Performance-based incentives provide an opportunity for Equitable Gas to make short-term releases of unutilized pipeline capacity, or “capacity releases,” for a fee or to participate in the bundling of gas supply and pipeline capacity for “off-system” sales. An “off-system” sale involves the purchase and delivery of gas to a customer at mutually agreed-upon points on facilities not owned by the Company. Equitable Gas’ performance-based purchased gas cost credit incentive and a second PA PUC-approved performance-based initiative related to balancing services were available through September 2005. Effective September 30, 2005, an Opinion and Order issued by the PA PUC modified the performance-based purchased gas cost credit design on a prospective basis, providing Equitable Gas with a 25% sharing level of capacity releases and off-system sales, and terminating the Company’s balancing service performance-based incentive. Equitable Gas has filed a petition for reconsideration and clarification with the PA PUC and is awaiting a final Order.

The gas cost rates effective for Equitable Gas’s residential and commercial customers beginning October 1, 2005, include then current high natural gas commodity prices, resulting in residential rates as much as 40% higher than those in place in 2004. These increases can present a significant challenge to the Company’s low-income customers, especially during the winter months. The Company is working with federal and state government officials, industry associations and local foundations to identify sources of funds to assist low income customers in paying their heating bills. In December 2005, Equitable Resources Foundation, Inc. made a grant of $1 million to the local Dollar Energy Fund, a non-profit organization which assists low-income consumers in paying their heating bills. In addition, the Company announced the creation of a new $1 million HELP Grant program, which it manages internally, to provide additional assistance to low-income consumers for the December 2005 through March 2006 winter heating season. Approximately $0.3 million of this amount was credited to eligible customers’ accounts during December 2005. In December 2005, the PA PUC approved Equitable Gas’s petition requesting approval to use up to $7 million of pipeline supplier refunds to benefit low-income customers in its service territory. Under programs designed and managed by Equitable Gas, the funds are being used to assist low-income customers in re-establishing and maintaining their service during the 2005-2006 winter heating season. Additionally, Pennsylvania Governor Rendell proposed and the state legislature approved $19 million in state funding for Low Income Home Energy Assistance Program (“LIHEAP”) grants to be administered by the Pennsylvania Department of Public Welfare. The Company will closely monitor its collections rates and adjust its reserve for uncollectible accounts as necessary.

The Responsible Utility Customer Protection Act, which became effective on December 14, 2004, established new procedures for Pennsylvania utilities regarding collection activities with respect to deposits, payment plans and terminations for residential customers and is intended to help utility companies collect amounts due from customers. As a result, beginning in 2005, the Company was permitted to begin sending winter termination notices to customers whose household income exceeds 250% of the federal poverty level and to complete customer terminations without approval from the PA PUC. In 2005, the Company sent termination notices to a number of eligible customers and will continue to utilize this mechanism in order to reduce delinquent accounts receivable from customers who have the ability to pay.

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Results of Operations

	Years Ended December 31,
	2005			2004			%		2003			%
OPERATIONAL DATA
Heating degree days (30 year average = 5,829)	5,543			5,360			3.4		5,695			(5.9	)
Residential sales and transportation volume (MMcf)	24,680			25,520			(3.3	)	27,262			(6.4	)
Commercial and industrial volume (MMcf)	25,368			29,597			(14.3	)	28,784			2.8
Total throughput (MMcf) – Distribution Operations	50,048			55,117			(9.2	)	56,046			(1.7	)
Net operating revenues (thousands):
Distribution Operations (regulated):
Residential	$	102,457		$	104,612		(2.1	)	$	109,821		(4.7	)
Commercial & industrial	46,857			48,563			(3.5	)	50,660			(4.1	)
Other	7,544			5,950			26.8		4,705			26.5
Total Distribution Operations	156,858			159,125			(1.4	)	165,186			(3.7	)
Pipeline Operations (regulated)	53,767			55,123			(2.5	)	52,926			4.2
Energy Marketing	42,739			28,457			50.2		27,011			5.4
Total net operating revenues	$	253,364		$	242,705		4.4		$	245,123		(1.0	)
Total operating expenses as a % of net operating revenues	61.22		%	55.44		%			55.17		%
Operating income (thousands):
Distribution Operations (regulated)	$	40,322		$	56,877		(29.1	)	$	63,093		(9.9	)
Pipeline Operations (regulated)	17,345			24,656			(29.7	)	22,415			10.0
Energy Marketing	40,587			26,616			52.5		24,371			9.2
Total operating income	$	98,254		$	108,149		(9.1	)	$	109,879		(1.6	)
Depreciation, depletion and amortization (DD&A) (thousands):
Distribution Operations	$	19,483		$	17,474		11.5		$	20,025		(12.7	)
Pipeline Operations	8,317			7,985			4.2		7,274			9.8
Energy Marketing	74			170			(56.5	)	284			(40.1	)
Total DD&A	$	27,874		$	25,629		8.8		$	27,583		(7.1	)
Capital expenditures (thousands)	$	61,349		$	56,274		9.0		$	60,414		(6.9	)

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	Years Ended December 31,
	2005			2004			%		2003			%
FINANCIAL DATA (thousands)
Distribution revenues (regulated)	$	469,102		$	422,438		11.0		$	396,203		6.6
Pipeline revenues (regulated)	57,534			55,123			4.4		52,926			4.2
Marketing revenues	382,479			300,513			27.3		205,258			46.4
Less: intrasegment revenues	(45,804		)	(46,213		)	(0.9	)	(41,019		)	12.7
Total operating revenues	863,311			731,861			18.0		613,368			19.3
Purchased gas costs	609,947			489,156			24.7		368,245			32.8
Net operating revenues	253,364			242,705			4.4		245,123			(1.0	)
Operating expenses:
Operating and maintenance (O & M)	57,315			52,481			9.2		51,208			2.5
Selling, general and administrative (SG&A)	66,080			56,446			17.1		56,453			—
Impairment charges	3,841			—			100.0		—			—
DD&A	27,874			25,629			8.8		27,583			(7.1	)
Total operating expenses	155,110			134,556			15.3		135,244			(0.5	)
Operating income	$	98,254		$	108,149		(9.1	)	$	109,879		(1.6	)

Fiscal Year Ended December 31, 2005 vs. December 31, 2004

Equitable Utilities’ operating income totaled $98.3 million for 2005 compared to $108.1 million for 2004. Net operating income for 2005 included $16.0 million in charges for the termination and settlement of defined benefit pension plans and a $3.8 million impairment charge in connection with the Company’s office consolidation.

Net operating revenues were $253.4 million for 2005 compared to $242.7 million for 2004. The $10.7 million increase in net operating revenues was primarily due to increased marketing net operating revenues of $14.2 million, resulting primarily from increased storage asset opportunities realized in a high and increasingly volatile natural gas commodity price environment. Distribution Operations’ net operating revenues decreased $2.2 million due to decreased volumes. Distribution Operations’ residential sales and transportation volumes decreased 840 MMcf from 2004 to 2005 due to decreased base load and lower customer use per degree day. These reductions resulted from increased customer conservation, more timely termination of non-paying customers in 2005 and other factors. Increased volumes as a result of colder weather partially offset these decreases in residential volumes, as heating degree days were 5,543 in 2005, which was 3% colder than the 5,360 heating degree days in 2004 although still warmer than normal. Distribution Operations’ commercial and industrial volumes decreased 4,229 MMcf from 2004 to 2005 primarily due to a reduction in industrial throughput to two major steel-making customers. These high volume industrial sales have very low unit margins and did not significantly impact total net operating revenues. Pipeline Operations’ net operating revenues decreased $1.3 million from 2004 to 2005 primarily due to a $3.8 million loss on fuel and retention in excess of the current rates. This loss was partially offset by increased revenues earned in loaning and parking services. These services are contracted on an as-available basis, as opposed to long-term firm storage contracts. This flexibility allows customers, including the Company’s marketing affiliate, to take advantage of the pipeline’s available storage to secure future supply at favorable prices. These services were heavily subscribed in 2005, as higher volatility in natural gas prices provided substantial value for storage options.

Operating expenses totaled $155.1 million for 2005 compared to $134.6 million for 2004. Operating expenses for 2005 included $16.0 million in charges related to the termination and settlement of certain defined benefit pension plans and a $3.8 million loss related to the impairment of certain leased offices, furniture and equipment in connection with the Company’s relocation into its new, consolidated office space. Excluding these

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items, operating expenses increased $0.7 million, which resulted from increases of $2.3 million in depreciation expense, $2.2 million in incentive compensation, $1.4 million in customer operations expenses and $1.1 million in employee benefit costs, largely offset by decreases of $4.7 million in bad debt expense and $1.4 million in insurance costs. The increased depreciation expense is a result of increased capital spending in Equitable Utilities over the past two years and is primarily related to computer hardware and software, distribution mainline and service line replacements and the installation of automated meter reading devices. The improvements in bad debt expense are a result of the more timely termination of non-paying customers, a full year impact of a $0.30 per Mcf regulatory surcharge instituted in April 2004, improved efforts to obtain alternative funding for low income customers and other improvements in the collections process. These improvements were offset somewhat in the fourth quarter of 2005 by high commodity rates and cold weather, which resulted in increased provisions for bad debt in that period compared to the prior year.

Fiscal Year Ended December 31, 2004 vs. December 31, 2003

Equitable Utilities’ operating income totaled $108.1 million for 2004 compared to $109.9 million for 2003. The $1.8 million decrease in operating income was primarily due to a decrease in net operating revenues resulting from warmer weather in 2004.

Net operating revenues were $242.7 million for 2004 compared to $245.1 million for 2003. The $2.4 million decrease in net operating revenues was primarily due to warmer weather in the first and fourth quarters of 2004. Heating degree days were 5,360 in 2004, which was 6% warmer than the 5,695 heating degree days in 2003. Additionally in February 2004, a rate moratorium for West Virginia customers expired. As a result, the Distribution Operations subsequently returned to normal gas recovery rates, which led to a decrease in net operating revenues of $0.9 million for the full year 2004. Such decreases for the Distribution Operations were partially offset by increased gathering revenue at the Distribution and Pipeline operations and higher storage related margins at the Pipeline Operations. Distributions Operations’ residential sales and transportation volumes decreased 1,742 MMcf from 2003 to 2004 primarily due to the warmer weather. Distributions Operations’ commercial and industrial volumes increased 813 MMcf from 2003 to 2004 primarily due to increases in sales to steel industry customers, partially offset by reductions in volumes sold to institutional and manufacturing customers and the effects of warmer weather. The increased high-volume steel industry sales have low unit margins and did not significantly impact total net operating revenues.

Operating expenses totaled $134.6 million for 2004 compared to $135.2 million for 2003. This $0.6 million decrease was the result of several factors. DD&A decreased $2.0 million primarily due to a $3.5 million adjustment related to increases in the estimated useful life for Equitable Gas’ main lines and services lines resulting from a PA PUC mandated asset service life study. This decrease was partially offset by increases in DD&A related mainly to increased capital in 2004, of which approximately $0.5 million was related to the implementation of a customer information system. SG&A was relatively consistent between years, with several offsetting fluctuations. Bad debt expense decreased by $1.7 million from 2003 to 2004 due to a reduction of a regulatory asset reserve of $7.5 million in 2004, partially offset by an increase of $5.8 million mainly related to delays in initiating collection activity due to the implementation of a customer information system in 2004 as well as increased gas rates in that year. The reduction in the regulatory asset reserve was due to Equitable Gas having higher than anticipated recoveries for the Delinquency Reduction Opportunity Program through payment and rates. Offsetting this and other reductions in SG&A, the Distribution Operations experienced increased insurance and legal costs of $1.7 million, a $0.9 million increase in Pennsylvania franchise tax, $0.7 million of expense incurred primarily related to increased overtime and contractor costs as a result of the flooding which occurred in September 2004 due to Hurricane Ivan and other slight increases in administrative expense accruals. O & M costs increased primarily as a result of $1.1 million related to the implementation of the customer information system.

See “Capital Resources and Liquidity” section for discussion of Equitable Utilities’ capital expenditures during 2005, 2004 and 2003.

Outlook

Equitable Utilities’ business strategy is focused on effectively managing its gas distribution assets, optimizing its return on assets, selectively growing its gas distribution business through acquisition and developing a portfolio

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of closely related, unregulated businesses with an emphasis on risk management and earnings viability. Key elements of Equitable Utilities’ strategy include:

•Enhancing the value and growth potential of the regulated utility operations. Equitable Utilities will seek to enhance the value and growth of its existing utility assets by managing its capital spending effectively; establishing a reputation for excellent customer service; continuing to leverage technology; working to achieve authorized returns in each jurisdiction and, in those jurisdictions where it has performance-based rates, sharing the benefits with its customers; and maintaining earnings and rate stability through regulatory arrangements that fairly balance the interests of customers and shareholders.

•Selectively evaluating acquisitions. The Company will selectively examine and evaluate the acquisition of natural gas distribution, gas pipeline or other gas-related assets. The Company’s acquisition criteria include the ability to generate operational synergies, strategic fit relative to the Company’s core competencies, value from near-term earnings contributions and adequate returns on invested capital.

•Selectively expanding Equitable Utilities natural gas storage and gathering operations. The Company intends to continue to expand its natural gas storage and gathering businesses to provide disciplined incremental earnings growth for shareholders. In its asset management business, Equitable Utilities intends to grow its business by providing its customers with gas supply, storage and asset management options; capturing value from increased natural gas gathering margins; providing producers with access to markets for their increased production; and arbitraging pipeline and storage assets across various gas markets and time horizons. In its underground storage business, Equitable Utilities will continue to invest capital to expand its operational capabilities by increasing storage deliverability, thereby providing an opportunity to capture increased value from the volatility in natural gas prices. Capturing this value from Equitable Utilities’ storage assets may increase the volatility of reported earnings from this business. Equitable Utilities will continue to focus on marketing energy to customers from its own assets; controlling costs; and managing its portfolio with smart business decisions while looking for additional opportunities to provide economical storage services in the regions in which the Company’s utilities operate.

Equitable Supply

Overview

Sale of Gas Properties

In May 2005, the Company sold certain non-core gas properties and associated gathering assets for proceeds of approximately $142 million after purchase price adjustments. The unit of production depletion rate (or DD&A rate) decreased by $0.04 per Mcfe prospectively as a result of this transaction. In accordance with SFAS No. 19, this sale of only a portion of the gas properties was treated as a normal retirement with no gain or loss recognized, as doing so did not significantly affect the DD&A rate.

Purchase of Interest in Eastern Seven Partners, L.P. (ESP)

In January 2005, the Company purchased the limited partnership interest in ESP for cash of $57.5 million and assumed liabilities of $47.3 million. Production related to this interest during 2005 totaled approximately 8.2 Bcf. The DD&A rate increased by $0.04 per Mcfe prospectively as a result of this transaction.

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Results of Operations

	Years Ended December 31,
	2005			2004			%		2003		%
OPERATIONAL DATA
Capital expenditures (thousands) (a)	$	264,095		$	141,661		86.4		$	204,527	(30.7	)
Production:
Total sales volumes (MMcfe)	73,909			67,731			9.1		64,306		5.3
Average (well-head) sales price ($/Mcfe)	$	5.17		$	4.46		15.9		$	3.91	14.1
Company usage, line loss (MMcfe)	4,897			5,090			(3.8	)	5,501		(7.5	)
Natural gas inventory usage, net (MMcfe)	(51		)	(61		)	(16.4	)	112		(154.5	)
Natural gas and oil production (MMcfe) (b)	78,755			72,760			8.2		69,919		4.1
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)	$	0.29		$	0.26		11.5		$	0.23	13.0
Production taxes ($/Mcfe)	$	0.49		$	0.34		44.1		$	0.28	21.4
Production depletion ($/Mcfe)	$	0.59		$	0.54		9.3		$	0.49	10.2
Gathering:
Gathered volumes (MMcfe)	121,044			127,339			(4.9	)	126,674		0.5
Average gathering fee ($/Mcfe)	$	0.82		$	0.58		41.4		$	0.55	5.5
Gathering and compression expense ($/Mcfe)	$	0.31		$	0.28		10.7		$	0.20	40.0
Gathering and compression depreciation ($/Mcfe)	$	0.12		$	0.11		9.1		$	0.09	22.2
(in thousands)
Production operating income	$	260,931		$	212,657		22.7		$	172,384	23.4
Gathering operating income	32,650			14,712			121.9		23,411		(37.2	)
Total operating income	$	293,581		$	227,369		29.1		$	195,795	16.1
Production depletion	$	46,750		$	39,100		19.6		$	33,911	15.3
Gathering and compression depreciation	14,312			13,441			6.5		11,711		14.8
Other DD&A	3,835			3,295			16.4		3,126		5.4
Total DD&A	$	64,897		$	55,836		16.2		$	48,748	14.5

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	Years Ended December 31,
	2005		2004		%		2003			%
FINANCIAL DATA (thousands)
Production revenues	$	390,290	$	315,986	23.5		$	262,607		20.3
Gathering revenues (c)	98,901		74,442		32.9		69,827			6.6
Total operating revenues	489,191		390,428		25.3		332,434			17.4
Operating expenses:
LOE, excluding production taxes	23,195		18,685		24.1		15,867			17.8
Production taxes (d)	38,288		24,589		55.7		19,820			24.1
Gathering and compression (O&M)	38,101		35,494		7.3		25,110			41.4
SG&A	30,610		28,455		7.6		27,094			5.0
Impairment charges	519		—		100.0		—			—
DD&A	64,897		55,836		16.2		48,748			14.5
Total operating expenses	195,610		163,059		20.0		136,639			19.3
Operating income	$	293,581	$	227,369	29.1		$	195,795		16.1
Equity in earnings of nonconsolidated investments	$	493	$	688	(28.3	)	$	431		59.6
Other income, net	$	—	$	576	(100.0	)	$	—		100.0
Minority interest	$	—	$	—	—		$	(871	)	(100.0	)

(a)2005 capital expenditures include $57.5 million for the acquisition of the limited partnership interest in ESP. 2003 capital expenditures include $44.2 million for the purchase of the remaining 31% limited partnership interest in Appalachian Basin Partners, L.P. (ABP).

(b)Natural gas and oil production represents the Company’s interest in gas and oil production measured at the well-head. It is equal to the sum of total sales volumes, Company usage, line loss, and natural gas inventory usage, net.

(c)Revenues associated with the use of pipelines and other equipment to collect, process and deliver natural gas from the field to the trunk or main transmission line. Many contracts are for a blended gas commodity and gathering price, in which case the Company utilizes standard measures in order to split the price into its two components.

(d)Production taxes include severance and production-related ad valorem and other property taxes.

Fiscal Year Ended December 31, 2005 vs. December 31, 2004

Equitable Supply’s operating income totaled $293.6 million for 2005 compared to $227.4 million for 2004, an increase of $66.2 million between years. Production operating income increased $48.2 million primarily due to an increase in well-head sales price and an increase in sales volumes, partially offset by increased production operating expenses. Gathering operating income increased $18.0 million due to an increase in the average gathering fee, partially offset by decreased gathered volumes and increased gathering operating expenses.

Total operating revenues were $489.2 million for 2005 compared to $390.4 million for 2004. The $98.8 million increase in net operating revenues was primarily due to a 16% increase in the average well-head sales price, a 9% increase in production total sales volumes and a 33% increase in gathering revenues. The $0.71 per Mcfe increase in the average well-head sales price was mainly attributable to increased market prices on unhedged volumes partially offset by an adjustment of $10.6 million. The adjustment was principally due to the Company’s conclusion that the well-head sales price allocated to a third party’s working interest gas in previous periods may have been lower than the Company was obligated to pay. The 9% increase in production total sales volumes was

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primarily the result of the purchase of ESP, partially offset by the sale of certain non-core gas properties. The 33% increase in revenues from gathering fees was attributable to a 41% increase in the average gathering fee, partially offset by a 5% decline in gathered volumes. The increase in average gathering fee is reflective of the Company’s commitment to an increased infrastructure capital program, along with higher gas prices and related operating cost increases. The decrease in gathered volumes in 2005 was primarily due to the sale of certain non-core gathering assets and third-party customer volume shut-ins caused by maintenance projects on interstate pipelines. These factors were partially offset by increased gathered volumes for Company production in 2005. These increases in production and gathering revenues were partially offset by the recognition of a gain of $2.7 million in 2004 that resulted from the renegotiation of a processing agreement.

Operating expenses totaled $195.6 million for 2005 compared to $163.1 million for 2004. A significant reason for this $32.5 million increase was due to additional costs of $15.0 million resulting from the purchase of ESP. The $15.0 million of costs were primarily related to DD&A ($4.7 million), production taxes ($4.6 million), lease operating expenses ($3.7 million) and gathering expenses ($2.0 million). Excluding the ESP costs, the $17.5 million increase in operating expenses was due to increases of $9.1 million in production taxes, $4.4 million in DD&A, $2.1 million in SG&A, $0.8 million in LOE, $0.6 million in gathering expenses and $0.5 million in impairment charges. The increase in production taxes was due to increased property taxes ($5.4 million) and severance taxes ($3.7 million). The increase in property taxes was a direct result of increased prices and sales volumes in prior years, as property taxes in several of the taxing jurisdictions where the Company’s wells are located are calculated based on historical gas commodity prices and sales volumes. The increase in severance taxes (a production tax directly imposed on the value of gas extracted) was primarily due to higher gas commodity prices and sales volumes in the various taxing jurisdictions that impose such taxes.

The increase in DD&A excluding ESP was due to a $0.05 per Mcf increase in the unit depletion rate ($4.3 million) and increased depreciation on a higher asset base ($1.4 million), partially offset by lower depletion as a result of decreased volumes from the sale of certain non-core gas properties ($1.3 million). The increase in the unit depletion rate was primarily due to the net development capital additions in 2005 and 2004 on a relatively consistent proved reserve base. The increase in SG&A was the result of increased legal and professional fees and bad debt expenses. The increase in LOE was the result of the Company’s strategy to focus on current infrastructure as well as increased costs from vendors due to higher gas prices. The increase in gathering expenses was primarily attributable to increased electricity charges resulting from newly installed electric compressors, field labor and related employment costs and compressor station operation and repair costs. The gathering and compression increases are consistent with the Company’s strategic decision to focus on improving gathering and compression and metering effectiveness. Such increases were partially offset by reductions in gathering expenses due to reduced gathered volumes. The impairment charges in 2005 were related to the Company’s relocation of its corporate headquarters and other operations to its new consolidated office space.

Other income, net for 2004 was the result of a $6.1 million settlement received from a previously disputed insurance coverage claim, offset by a $5.5 million expense related to the Company’s settlement of a prepaid forward contract in 2004.

Fiscal Year Ended December 31, 2004 vs. December 31, 2003

Equitable Supply’s operating income totaled $227.4 million for 2004 compared to $195.8 million for 2003. Total operating revenues were $390.4 million for 2004 compared to $332.4 million for 2003. The $58.0 million increase in total operating revenues was primarily due to a 14% increase in the average well-head sales price, a 5% increase in production total sales volumes and a 7% increase in gathering revenues. The $0.55 per Mcfe increase in the average well-head sales price was attributable to higher gas commodity prices, increased volumes at higher hedged prices and increased basis over the same period in 2003. The 5% increase in production total sales volumes was primarily the result of new wells drilled and production enhancements partially offset by the normal production decline in the Company’s wells. The increase in gathering revenues was attributable to a 6% increase in the average gathering fee and higher Equitable Production sales volumes (resulting in increased gathered volumes), partially offset by third party customer volume shut-ins.

Operating expenses were $163.1 million for 2004 compared to $136.6 million for 2003. This $26.5 million increase was due to increases of $10.4 million in gathering and compression expenses, $7.1 million in DD&A, $4.8

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million in production taxes, $2.8 million in LOE, and $1.4 million in SG&A. The increase in gathering and compression expenses was primarily attributable to an increase in compressor station operation and repair costs, field labor and related employment costs, field line maintenance costs and compressor electricity charges resulting from newly installed electric compressors. The additional compression costs resulted from a 24% increase in horse power to approximately 112,000 horse power in 2004 from approximately 90,000 horse power in 2003. The increase in field labor was due to an increase in headcount related to Equitable Gathering’s strategy to spend more time and resources to aggressively tend to the improvement of the base infrastructure. Actions taken by Equitable Gathering to support this strategy, such as the installation of compressor stations and facilities to reduce surface pressure and efforts related to reducing the internal curtailment of gas sales, increased compression and field line maintenance costs in 2004.

The increase in DD&A was primarily due to a $0.05 per Mcfe increase in the unit depletion rate, increased production volumes and capital expenditures for gathering system improvements and extensions. The $0.05 per Mcfe increase in the unit depletion rate was due to the net development capital additions in 2003 on a relatively consistent proved reserve base. The increase in production taxes was primarily due to higher gas commodity prices and sales volumes. The increase in LOE was primarily due to a charge to earnings for environmental site assessments performed in accordance with the Company’s amended Spill Prevention, Control and Countermeasure (SPCC) compliance plan and increased liability insurance premiums. The increase in SG&A was due to increased franchise taxes in 2004.

See “Capital Resources and Liquidity” section for discussion of Equitable Supply’s capital expenditures during 2005, 2004 and 2003.

Outlook

Equitable Supply’s business strategy is focused on achieving profit maximization by primarily focusing on developing new opportunities, through increased drilling and other development in the Appalachian Basin, as well as improvements to and expansion of its gathering systems, and secondarily focusing on cost control. The Company believes that the margin leverage from realizable gas prices outweighs the increase in unit cost structure necessary to implement this strategy. Key elements of Equitable Supply’s strategy include:

•Expanding production through the drilling program. Equitable Supply has a multi-year drilling program which will enable the Company to continue the growth of its production business. Equitable Supply intends to increase its drilling rate by over 20% to 550 wells in 2006. The Company’s forecasted capital expenditures for 2006 include a 48% increase in expenditures related to Appalachian development. The Company believes that it has available on acreage it controls at least 4,600 net drilling locations on unproved properties, in addition to 2,292 net proved undeveloped drilling locations. Equitable Supply believes that its 692 Bcfe of proved undeveloped reserves will be developed within a reasonable time period (currently estimated to be five years) because (1) Equitable Supply has completed substantially all of the wells it has drilled in the last three years, (2) Equitable Supply developed proved undeveloped reserves of 70 Bcfe and 62 Bcfe during 2005 and 2004, respectively, and (3) Equitable Supply’s plans include developing similar levels of proved undeveloped reserves going forward.

•Maintaining and enhancing base well production. Equitable Supply will seek to maximize production of existing base wells by increased focus on maintenance, technology improvements and recompletions (deepening a well to another horizon or attempting to secure production from a shallower horizon). Through these activities, Equitable Supply can benefit from higher gas prices by obtaining accelerated volumes from its existing wells.

•Expanding the gathering system to support drilling and third party gathering revenues. The Company will continue to expand its pipeline and compression infrastructure in order to manage increased gathered volumes from both Company drilling programs and third party shippers. The Company plans to expand its gathering systems by approximately 190 miles of pipeline and approximately 20,000 horsepower of compression in 2006. Many of the existing pipelines will be increased in size to handle these additional volumes and new pipelines will be constructed to expanded drilling areas. The Company plans to build new compression stations as well as expand existing stations in order to transport these volumes to sales points on major interstate pipelines.

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•Investing in midstream gathering and processing in the Appalachian Basin. In a high price natural gas market, infrastructure needed to support increased drilling and to move gas from wellhead to market presents an acute need but also a significant opportunity for the Company. The Company has begun a significant new pipeline infrastructure project, the Big Sandy Pipeline. The 60 mile, 20-inch pipeline is expected to have a capacity of 70,000 dekatherms per day and will connect the Kentucky Hydrocarbon processing plant in Langley, Kentucky with the Tennessee Gas Pipeline interconnect in Carter County, Kentucky. The Big Sandy Pipeline is projected to cost a total of $83 million. The Company is also planning an upgrade to its Langley plant. These projects are scheduled for operation in 2007 and will enable the Company to further support its drilling growth, mitigate pipeline curtailments, increase flexibility and reliability of its midstream gathering systems and capitalize on third party producer demand in the Appalachian Basin. Natural gas processing expansion will continue to be required in order to meet the interstate pipeline gas quality standards and will represent an opportunity for the Company. The Company is looking at several processing, pipeline and compression expansion opportunities in Appalachia and expects to invest in additional projects in 2006 and beyond.

•Optimizing throughput of the existing gathering system. The Company will optimize its existing gathering assets by making technological improvements, upgrading existing compressors and eliminating bottlenecks in its gathering systems. While these initiatives will result in increased costs, the Company will continue to focus on ensuring that costs incurred in its gathering activities, both operating and capital, plus a reasonable rate of return on its gathering assets, are recovered in rates for transporting gas on its gathering systems. A part of this strategy includes increasing the rates that the Company charges to parties who transport gas on these systems. In certain instances, such rate increases require regulatory action. The Company expects the process of increasing gathering rates to extend beyond 2006.

Other Income Statement Items

	Years Ended December 31,
	2005		2004			2003
	(Thousands)
Income (loss) from discontinued operations	$	1,481	$	(18,936	)	$	7,807
Gain on sale of available-for-sale securities, net	110,280		3,024			13,985
Other income, net	1,195		3,692			—
Gain on exchange of Westport for Kerr-McGee shares	—		217,212			—
Charitable foundation contribution	—		(18,226		)	(9,279		)
Equity earnings of Westport	—		—			3,614

As noted in Item 1, the Company’s NORESCO business is classified as discontinued operations due to the sale of the NORESCO domestic business and pending sale of the Company’s remaining international investment. Income (loss) from discontinued operations for 2004 included approximately $23.9 million of after-tax impairments on international investments and charges for related reserves, while income (loss) from discontinued operations for 2005 included the reversal of approximately $7.8 million of these reserves (after tax) due to improved business conditions in the related international markets, as well as a $6.4 million tax benefit from the reorganization of the Company’s international assets in 2005. These increases in 2005 as compared to 2004 were partially offset by $18.7 million in after-tax charges recorded in 2005, related to the recording of $13.7 million of income taxes on the sale and other costs incurred as a result of the sale transaction.

During 2005, the Company sold its remaining 7.0 million Kerr-McGee shares resulting in pre-tax gains net of collar termination costs totaling $110.3 million. During 2004, the Company sold 0.8 million Kerr-McGee shares, resulting in a pre-tax gain of $3.0 million. During 2003, the Company sold approximately 1.5 million Westport shares, resulting in a pre-tax gain of $14.0 million.

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Other income, net includes pre-tax dividend income relating to the Kerr-McGee shares held by the Company of $1.2 million and $3.1 million for 2005 and 2004, respectively.

As a result of the 2004 merger between Westport and Kerr-McGee, the Company recognized a gain of $217.2 million on the exchange of its Westport shares for Kerr-McGee shares. See Note 9 to the Company’s Consolidated Financial Statements for further information on this transaction.

In the first quarter of 2003, the Company established Equitable Resources Foundation, Inc. to facilitate the Company’s charitable giving program. This foundation received additional funding in the second quarter of 2004. See Note 9 to the Company’s Consolidated Financial Statements for information regarding the charitable foundation contribution expense recorded upon contributions of Kerr-McGee shares made to Equitable Resources Foundation, Inc. during 2004.

The Company reported $3.6 million in equity earnings from its minority ownership in Westport during the first quarter 2003. At the end of the first quarter of 2003, the Company’s ownership position in Westport decreased below 20%. As a result of the decreased ownership, the Company changed the accounting treatment for its investment from the equity method to the available-for-sale method effective March 31, 2003.

Interest Expense

	Years Ended December 31,
	2005		2004		2003
	(Thousands)
Interest expense	$	44,437	$	42,520	$	41,530

Interest expense increased by $1.9 million from 2004 to 2005 primarily due to the issuance of $150 million of notes with a stated interest rate of 5% on September 30, 2005 and an increase in the average annual short-term debt interest rate. These increases were partially offset by the maturity of $10 million of medium-term notes during 2005.

Interest expense increased by $1.0 million from 2003 to 2004 primarily due to increases in short-term borrowing activity during 2004 as well as an increase in the average annual short-term debt interest rate.

Average annual interest rates on the Company’s short-term debt were 3.5%, 1.7% and 1.2% for 2005, 2004 and 2003, respectively.

Capital Resources and Liquidity

Operating Activities

Cash flows used in operating activities totaled $312.0 million for 2005 as compared to $180.0 million of cash flows provided by operating activities for 2004, a net increase of $492.0 in cash flows used in operating activities between years. The increase in cash flows used in operating activities was attributable to the following:

•an increase in margin deposit requirements on the Company’s natural gas hedge agreements to $317.8 million as of December 31, 2005, from $36.9 million as of December 31, 2004. As further detailed under the captions “Financing Activities” and “Short-term Borrowings” to follow, the Company has taken steps to ensure it has adequate liquidity for working capital and margin requirement needs;

•an increase in tax payments to $251.5 million in 2005 compared to $23.0 million in 2004, primarily due to the sale of the Company’s Kerr-McGee shares, the sale of the NORESCO discontinued operations and the sale of non-core gas properties for significant taxable gains in 2005;

•an increase in inventory to $289.9 million as of December 31, 2005, from $204.6 million as of December 31, 2004, primarily due to increased natural gas prices on volumes stored in 2005 compared to 2004;

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•cash contributions of approximately $20.4 million to its pension plan during 2005 as compared to no contributions in 2004.

partially offset by:

•an increase in accounts payable to $242.6 million as of December 31, 2005, from $171.2 million as of December 31, 2004, largely due to increased operating costs resulting from increased drilling activity and higher natural gas prices.

Cash flows provided by operating activities totaled $180.0 million for 2004 as compared to $128.6 million for 2003, a $51.4 million increase between years.  The increase in cash flows provided by operating activities was attributable to the following:

•increased collections from customers in 2004 as compared to 2003, driven primarily by increased net operating revenues in the Company’s Supply segment;

•no cash contributions to the Company’s pension plan in 2004, as compared to a cash contribution of $51.8 million in 2003;

partially offset by:

•a $36.8 million payment in 2004 resulting from the Company’s amendment of a prepaid forward contract in the second quarter of 2004.  This amendment resulted in the Company repaying the net present value of the portion of the prepayment related to undelivered quantities of natural gas in the original contract;

•Cash flows from operations were also affected by other working capital changes during 2004.

Investing Activities

Cash flows provided by investing activities totaled $347.7 million for 2005 as compared to $158.5 million of cash flows used in investing activities for 2004, a net increase of $506.2 million in cash flows provided by investing activities between years.  The increase in cash flows provided by investing activities was attributable to the following:

•proceeds of $460.5 million from the sale of the Company’s remaining 7.0 million shares of Kerr-McGee in 2005, as compared to proceeds of $42.9 million from the sale of 0.8 million shares of Kerr-McGee in 2004;

•proceeds of $142.0 million from the sale of certain non-core gas properties and associated gathering assets in 2005;

•proceeds of $80.0 million from the sale of the domestic operations of the Company’s NORESCO business segment in 2005;

partially offset by:

•an increase in capital expenditures to $333 million in 2005 from $202 million in 2004.  See discussion of capital expenditures below.

Cash flows used in investing activities totaled $158.5 million for 2004 as compared to $215.3 million for 2003, a net decrease of $56.8 in cash flows used in investing activities between years.  The decrease in cash flows used in investing activities was primarily attributable to a decrease in capital expenditures (see discussion of capital expenditures below) to $202 million in 2004 from $265 million in 2003.

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Capital Expenditures

	2006 Forecast			2005 Actual		2004 Actual		2003 Actual
Development of Appalachian holdings (primarily drilling)	$	194 million		$	131 million	$	92 million	$	126 million
					plus $58 million for the purchase of ESP				plus $44 million for the purchase of 31% of ABP
Gathering system improvements and extensions	$	222 million		$	75 million	$	50 million	$	34 million
Equitable Utilities	$	78 million		$	61 million	$	56 million	$	60 million
Headquarters	$	3 million		$	8 million	$	4 million	$	1 million
Total	$	497 million	*	$	333 million	$	202 million	$	265 million

* The 2006 capital expenditures include 2005 capital commitments totaling $105 million.

Capital expenditures for Appalachian holdings development and gathering system improvements and extensions increased in 2005 as compared to 2004 primarily due to an increased drilling and development plan in 2005.  Such expenditures were lower in 2004 as compared to 2003 primarily due to a decrease in the level of development drilling in the Appalachian holdings to allow Equitable Supply to concentrate on its core assets and ensure a proper level of return on all new projects.

Capital expenditures for Equitable Utilities increased in 2005 as compared to 2004 due to the installation of electronic meter reading technology on approximately 113,000 of the 265,000 meters in the Distribution Operations.  The $17 million project to install electronic meter reading technology on all 265,000 meters is expected to be completed in 2006.  The Company anticipates that the benefits from this project will result in approximately $2.0 million in annual cost savings.  Capital expenditures for Equitable Utilities decreased in 2004 as compared to 2003 due to a decrease in technological enhancement project spending, partially offset by increased main line replacement costs and new business development spending.

The Company’s capital expenditures forecasted for 2006 represent a significant increase over capital expenditures in 2005.  The $194 million targeted for the development of Appalachian holdings in 2006 represents a $63 million increase over 2005 which is attributable to an expanded drilling program in Virginia, West Virginia and Kentucky.  The $222 million forecasted for 2006 gathering system improvements and extensions includes a further expansion in infrastructure to support the Company’s current and future drilling plans and expenditures for the Big Sandy Pipeline project.  The pipeline, which is projected to cost a total of $83 million, including $53 million in the 2006 forecast, is scheduled for operation in 2007.

The $78 million forecasted for Equitable Utilities includes $73 million for infrastructure improvements and $5 million for new business development.  The infrastructure improvements include improvements to existing distribution and transmission lines, the continued installation of automated metering devices in the Distribution business and storage enhancements.  The new business capital is planned for extensions of existing infrastructure into adjacent geographic areas.

The Company expects to finance its capital expenditures with cash generated from operations and with short-term debt.  See discussion in the “Short-term Borrowings” section below regarding the financing capacity of the Company.

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Financing Activities

Cash flows provided by financing activities totaled $39.2 million for 2005 as compared to $55.8 million of cash flows used in financing activities for 2004, a net increase of $95.0 in cash flows provided by financing activities between years.  The increase in cash flows provided by financing activities from 2004 to 2005 was attributable largely to the following:

•proceeds from the issuance in 2005 of $150 million of notes with a stated interest rate of 5% and a maturity date of October 1, 2015;

•a decrease in current maturities of the Company’s medium-term notes of $10.5 million in 2005;

partially offset by:

•less of an increase in amounts borrowed under short-term loans in 2005 as compared to 2004;

•an increase in dividends paid to shareholders to $99.7 million in 2005 from $89.4 million in 2004;

•an increase in the cost to repurchase shares of the Company’s outstanding common stock to $122.3 million for 3.6 million shares for 2005 from $118.5 million for 4.7 million shares for 2004.

Cash flows used in financing activities totaled $55.8 million for 2004 as compared to $112.9 million of cash flows provided by financing activities for 2003, a net increase of $168.7 million in cash flows used in financing activities between years.  The increase in cash flows used by financing activities from 2003 to 2004 was attributable to the following:

•a net increase of $75.0 million in long-term debt during 2003 due to the issuance of $200 million of notes offset by the redemption of $125 million of Trust Preferred Securities, with no such items in 2004;

•an increase in the cost to repurchase shares of the Company’s outstanding common stock to $118.5 million for 4.7 million shares in 2004 from $55.2 million for 2.9 million shares in 2003;

•an increase in dividends paid to shareholders to $89.4 million in 2004 from $60.4 million in 2003;

The Company believes that cash generated from operations, amounts available under its credit facilities and amounts which the Company could obtain in the debt and equity markets given its financial position, are more than adequate to meet the Company’s reasonably foreseeable liquidity requirements.

Short-term Borrowings

Cash required for operations is affected primarily by the seasonal nature of the Company’s natural gas distribution operations and the volatility of oil and natural gas commodity prices.  The Company’s $1 billion, five-year revolving credit agreement may be used for working capital, capital expenditures, share repurchases and other lawful purposes including support of the Company’s commercial paper program.  Historically, short-term borrowings under the commercial paper program have been used mainly to support working capital requirements during the summer months and are repaid as natural gas is sold during the heating season.  Due to continued higher than average natural gas prices and resulting increases in the Company’s net liability position under its natural gas swap agreements, the Company also borrowed increased amounts through its commercial paper program to fund its interest-bearing margin deposits under its exchange-traded natural gas agreements.  The amount of commercial paper outstanding at December 31, 2005 was $365.3 million.  Interest rates on these short-term loans averaged 3.5% during 2005.

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Security Ratings and Financing Triggers

The table below reflects the current credit ratings for the outstanding debt instruments of the Company. Changes in credit ratings may affect the Company’s cost of short-term and long-term debt and its access to the credit markets.

Rating Service	Unsecured Medium-Term Notes	Commercial Paper
Moody’s Investors Service	A-2	P-1
Standard & Poor’s Ratings Services	A -	A-2

The Company’s credit ratings on its non-credit-enhanced, senior unsecured long-term debt, determine the level of fees associated with its lines of credit in addition to the interest rate charged by the counterparties on any amounts borrowed against the lines of credit; the lower the Company’s credit rating, the higher the level of fees and borrowing rate.  As of December 31, 2005, the Company had no outstanding borrowings against these lines of credit.  The Company pays facility fees to maintain credit availability.

The Company’s credit ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.  The Company cannot ensure that a rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a credit rating agency if, in its judgment, circumstances so warrant.  If the credit rating agencies downgrade the Company’s ratings, particularly below investment grade, it may significantly limit the Company’s access to the commercial paper market and borrowing costs would increase.  In addition, the Company would likely be required to pay a higher interest rate in future financings, incur increased margin deposit requirements, and the potential pool of investors and funding sources would decrease.

The Company’s debt instruments and other financial obligations include provisions that, if not complied with, could require early payment, additional collateral support or similar actions.  The most important default events include maintaining covenants with respect to maximum leverage ratio, insolvency events, nonpayment of scheduled principal or interest payments, acceleration of other financial obligations and change of control provisions.  The Company’s current credit facility’s financial covenants require a total debt-to-total capitalization ratio of no greater than 65%.  This calculation excludes unrealized gains or losses from hedging transactions recorded in accumulated other comprehensive income (loss).  As of December 31, 2005, the Company is in compliance with all existing debt provisions and covenants.

Commodity Risk Management

The Company’s overall objective in its hedging program is to protect earnings from undue exposure to the risk of changing commodity prices.  The Company’s risk management program includes the use of exchange-traded natural gas futures contracts and options and OTC natural gas swap agreements and options (collectively, derivative commodity instruments) to hedge exposures to fluctuations in natural gas prices and for trading purposes.  The preponderance of derivative commodity instruments currently utilized by the Company are fixed price swaps or NYMEX-traded forwards.

During the third quarter of 2005, the Company increased its hedge position for 2006 through 2012.  The new hedges are collars, which protect revenues from decreases in natural gas prices below a floor but also limit the upside exposure to increases in prices to a cap.

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The approximate volumes and prices of the Company’s hedges for 2006 through 2008 are:

	2006		2007		2008
Swaps
Total Volume (Bcf)	59		56		54
Average Price per Mcf (NYMEX)*	$	4.77	$	4.74	$	4.64
Collars
Total Volume (Bcf)	7		7		7
Average Floor Price per Mcf (NYMEX)*	$	7.35	$	7.35	$	7.35
Average Cap Price per Mcf (NYMEX)*	$	10.84	$	10.84	$	10.84

* The above price is based on a conversion rate of 1.05 MMBtu/Mcf

The Company’s current hedged position provides price protection for a substantial portion of expected equity production for the years 2006 through 2008 and a significant portion of expected equity production for the years 2009 through 2012.  The Company’s exposure to a $0.10 change in average NYMEX natural gas price is less than $0.01 per diluted share for 2006 and ranges from $0.01 to $0.02 per diluted share per year for 2007 and 2008.  The Company also engages in a limited number of basis swaps to protect earnings from undue exposure to the risk of geographic disparities in commodity prices.  See Note 3 to the Company’s Consolidated Financial Statements for further discussion.

Investment Securities

The Company’s available-for-sale investments as of December 31, 2005 consist of approximately $25.2 million of equity securities that are intended to fund certain liabilities for which the Company is self-insured.  These investments are recorded at fair market value.  During 2005, the Company sold all of its remaining 7.0 million shares of Kerr-McGee in various transactions for total net pre-tax proceeds of $460.5 million and a total pre-tax gain of $110.3 million, net of $95.8 million in costs associated with the termination of the three related variable share forward transactions entered into in June 2004 subsequent to the Westport/Kerr-McGee merger.  The sale of these shares was determined by the Company to constitute the best use of this asset due to the significant appreciation in the value of the Kerr-McGee shares during 2005.

Other Items

Off-Balance Sheet Arrangements

The Company has a non-equity interest in a variable interest entity, Appalachian NPI, LLC (ANPI), in which Equitable was not deemed to be the primary beneficiary.  As of December 31, 2005, ANPI had $243 million of total assets and $498 million of total liabilities (including $155 million of long-term debt, including current maturities), excluding minority interest.

The Company provides a liquidity reserve guarantee to ANPI, which is subject to certain restrictions and limitations, and is secured by the fair market value of the assets purchased by the Appalachian Natural Gas Trust (ANGT).  The Company received a market-based fee for the issuance of the reserve guarantee.  As of December 31, 2005, the maximum potential amount of future payments the Company could be required to make under the liquidity reserve guarantee is estimated to be approximately $43 million.  The Company has not recorded a liability for this guarantee, as the guarantee was issued prior to the effective date of FIN 45 and has not been modified subsequent to issuance.

The Company has entered into an agreement with ANGT to provide gathering and operating services to deliver ANGT’s gas to market.  In addition, the Company receives a marketing fee for the sale of gas based on the net revenue for gas delivered.  The revenue earned from these fees totaled approximately $15.5 million for 2005.

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In connection with the sale of its NORESCO domestic business, the Company through indirect subsidiaries has agreed to maintain certain guarantees which benefit NORESCO.  These guarantees, the majority of which predate the sale of NORESCO, became off-balance sheet arrangements upon the closing of the sale of NORESCO on December 30, 2005.  These arrangements include guarantees of NORESCO’s obligations to the purchasers of certain of NORESCO’s contract receivables and agreements to maintain guarantees supporting NORESCO’s obligations under certain customer contracts.  In addition, NORESCO and the purchaser agreed that NORESCO would fully perform its obligations under each underlying agreement and that the purchaser or NORESCO would reimburse the Company for losses under the guarantees.  The purchaser’s obligations to reimburse the Company are capped at $6 million.  The Company has performed an extensive review of these guarantees and of the underlying obligations and has determined that the likelihood the Company will be required to perform on these arrangements is remote.  As such, the Company has not recorded any liabilities in its Consolidated Balance Sheets related to these guarantees.  The total maximum potential obligation under these arrangements is estimated to be approximately $512 million and will decrease over time as the guarantees expire or the underlying obligations are fulfilled by NORESCO.

See Note 20 to the Consolidated Financial Statements for further discussion of the Company’s guarantees.

Pension Plans

Total pension expense recognized by the Company in 2005, 2004 and 2003, excluding special termination benefits, settlement losses and curtailment losses, totaled $0.4 million, $0.4 million and $2.9 million, respectively.  The Company recognized special termination benefits, settlement losses and curtailment losses in 2005, 2004 and 2003 of $18.4 million, $16.2 million and $4.4 million, respectively.  As a result of these one-time costs, the Company’s projected benefit obligation decreased by approximately $34.6 million.

During 2005, the Company settled its pension obligation with the United Steelworkers of America, Local Union 12050 representing 182 employees.  As a result of this settlement, the Company recognized a settlement expense of $12.1 million during 2005.  During the fourth quarter of 2005, the Company settled its pension obligation with certain non-represented employees.  As a result of this settlement, the Company recognized a settlement expense of approximately $2.4 million in 2005.

Effective December 31, 2004, the Company settled the pension obligation of those non-represented employees (cash balance participants) whose benefits were frozen as of December 31, 2003.  As a result of this settlement, the Company recognized a one-time settlement expense of $13.4 million in 2004.

The Company made cash contributions of approximately $20.4 million to its pension plan during 2005 as a result of the previously described settlements.  The Company expects to make a cash contribution of approximately $2.3 million to its pension plan during 2006.  The Company was not required to, and consequently did not make any contribution to its pension plans during the year ended December 31, 2004.  The Company made cash contributions totaling $51.8 million to its pension plan during the year ended December 31, 2003, primarily due to the Company’s benefit obligation being significantly under funded.

Incentive Compensation

The Company has now fully transitioned to a long-term incentive approach that is focused on performance-restricted stock or units and time-restricted stock.  Management and the Board of Directors believe that such an incentive compensation approach more closely aligns management’s incentives with shareholder rewards than is the case with traditional stock options.  The Company has long utilized time-restricted stock in its compensation plans and began issuing performance-restricted units in 2002.  No new stock options have been awarded since 2003.

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The Company recorded the following incentive compensation expense in continuing operations for the periods indicated below:

	Year Ended December 31,
	2005		2004		2003
	(millions)
Short-term incentive compensation expense	$	12.9	$	13.7	$	9.5
Long-term incentive compensation expense	46.4		28.3		16.6
Total incentive compensation expense	$	59.3	$	42.0	$	26.1

The long-term incentive compensation expenses are primarily associated with Executive Performance Incentive Programs (“the Programs”).  The long-term incentive compensation expenses during 2005 were higher than during 2004 primarily due to a higher estimated share price for the Programs being expensed, as a result of the Company’s share price appreciation, and a greater number of units granted under the current Programs as compared to the Programs in place during 2004.  The long-term incentive compensation expenses during 2004 were higher than during 2003 primarily as a result of the Company’s share price appreciation as well.

The Company currently estimates 2006 total incentive compensation expense of approximately $35 million, less than that incurred during 2005 due primarily to the payout of one of the Programs in December 2005.

Federal Legislation

The American Jobs Creation Act of 2004 (the Jobs Act), which the President signed into law on October 22, 2004, was the first major corporate tax act in a number of years.  Some of the key provisions of the Jobs Act include a new domestic manufacturing deduction, oil and gas producer incentives (not an extension of the nonconventional fuels tax credit), new tax shelter penalties, restrictions on deferred compensation and numerous other issue-specific provisions aimed at specific transactions.  On September 29, 2005, the Treasury Department and the IRS issued proposed regulations providing deferred compensation guidance under the new legislation.  During 2005, the Company completed its review of the legislation’s impact on its executive compensation plans and the Compensation Committee of the Company’s Board of Directors decided to end the Company’s deferred compensation programs for employees.  As a result, the Company recorded $15.3 million in tax benefit disallowances under Section 162(m) of the IRC, primarily as the result of impairment of previously recorded deferred tax assets related to the employee deferred compensation programs and the 2003 Executive Performance Incentive Program.

Rate Regulation

The Company’s Distribution Operations and Pipeline Operations are subject to various forms of regulation as previously discussed.  Accounting for the Company’s regulated operations is performed in accordance with the provisions of SFAS No. 71.  As described in Notes 1 and 10 to the Consolidated Financial Statements, regulatory assets and liabilities are recorded to reflect future collections or payments through the regulatory process.  The Company believes that it will continue to be subject to rate regulation that will provide for the recovery of the deferred costs.

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Schedule of Contractual Obligations

The following table details the future projected payments associated with the Company’s contractual obligations as of December 31, 2005.

	Total		2006		2007-2008		2009-2010		2011+
	(Thousands)
Long-term debt	$	766,434	$	3,000	$	10,000	$	4,300	$	749,134
Interest expense	543,241		45,178		88,980		88,567		320,516
Purchase obligations	187,154		32,393		56,104		48,927		49,730
Operating leases	62,848		7,337		12,326		7,910		35,275
Other long-term liabilities	89,860		—		89,860		—		—
Total contractual obligations	$	1,649,537	$	87,908	$	257,270	$	149,704	$	1,154,655

Included within the purchase obligations amount in the table above are annual commitments of approximately $31.4 million relating to the Company’s natural gas distribution and production operations for demand charges under existing long-term contracts with pipeline suppliers for periods extending up to ten years.  Approximately $20.0 million of these costs are believed to be recoverable in customer rates.

Operating leases are primarily entered into for various office locations and warehouse buildings, as well as a limited amount of equipment.  In May 2005, the Company completed the relocation of its corporate headquarters and other operations to a newly constructed office building located at the North Shore in Pittsburgh.  The base rent payments under the new North Shore lease of approximately $2.3 million per year have been included in the table above.  The relocation resulted in the early termination of several operating leases for facilities deemed to have no economic benefit to the Company.  These obligations, which totaled $10.1 million as of December 31, 2005, are also included in operating lease obligations detailed above.

The other long-term liabilities line represents the total estimated payout for the 2005 Executive Performance Incentive Program.  See section titled “Critical Accounting Policies Involving Significant Estimates” and Note 16 to the Consolidated Financial Statements for further discussion regarding factors that affect the ultimate amount of the payout of this obligation.

Contingent Liabilities and Commitments

At the end of the useful life of a well, the Company is required to remediate the site by plugging and abandoning the well.  Costs incurred during 2005, 2004 and 2003 for such activities were not material to the Company and are not expected to be material to operating results in future periods.

The various regulatory authorities that oversee Equitable’s operations will, from time to time, make inquiries or investigations into the activities of the Company.  It is the Company’s policy to comply with applicable laws and cooperate when regulatory bodies make requests.

See Note 19 to the Consolidated Financial Statements for further discussion of the Company’s contingent liabilities and commitments.

Cumulative Effect of Accounting Change

Effective January 1, 2003, the Company adopted SFAS No. 143, which requires that the fair value of a liability for an asset retirement obligation be recognized by the Company at the time the obligation is incurred.  The adoption of SFAS No. 143 by the Company resulted in an after-tax charge to earnings of $3.6 million, which was reflected as the cumulative effect of accounting change in the Company’s Statement of Consolidated Income for the year ended December 31, 2003.

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Critical Accounting Policies Involving Significant Estimates

The Company’s significant accounting policies are described in Note 1 to the Consolidated Financial Statements included in Item 8 of this Form 10-K.  The discussion and analysis of the Consolidated Financial Statements and results of operations are based upon Equitable’s Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles.  The preparation of these Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities.  The following critical accounting policies, which were reviewed and approved by the Company’s Audit Committee, relate to the Company’s more significant judgments and estimates used in the preparation of its Consolidated Financial Statements.  There can be no assurance that actual results will not differ from those estimates.

Allowance for Doubtful Accounts:  Equitable Gas encounters risks associated with the collection of its accounts receivable.  As such, Equitable Gas records a monthly provision for accounts receivable that are considered to be uncollectible.  In order to calculate the appropriate monthly provision, Equitable Gas primarily utilizes a historical rate of accounts receivable “write-offs” as a percentage of total revenue.  This historical rate is applied to the current revenues on a monthly basis and is updated periodically based on events that may change the rate, such as a significant increase or decrease in commodity prices or a significant change in the weather.  Both of these items ultimately impact the customers’ ability to pay and the rates that are charged to the customers due to the pass-through of purchased gas costs to the customers.  Management reviews the adequacy of the allowance on a quarterly basis using the assumptions that apply at that time.

For 2005, the monthly provision for uncollectible accounts was established at approximately 2% of residential sales, a decrease from the 4% rate utilized for 2004.  Beginning in April 2004, the Company began collecting a regulatory surcharge in the amount of $0.30 per Mcfe of gas sold to residential customers to help recover the costs associated with providing gas service to low-income customers.  This surcharge is credited to the reserve for uncollectible accounts and reduces the amount which would otherwise be recognized as bad debt expense.  This surcharge totaled $6.5 million in 2005 and $3.3 million in 2004.  In addition, during 2004, Equitable Gas implemented a new customer information and billing system that has enabled the Company to better segment customer information in order to identify customers who may have difficulty paying.  Also, under the Responsible Utility Customer Protection Act which became effective in Pennsylvania in December 2004, Equitable Gas is permitted to send winter termination notices to customers whose household income exceeds 250% of the federal poverty level and to complete customer terminations without approval from the PA PUC.  The Company took advantage of these winter terminations during 2005 in an effort to reduce its uncollectible accounts receivable.  Despite the continued increases in natural gas prices throughout 2005, the Company expects to realize a decrease in accounts written off as a result of these initiatives and has consequently reduced its provision for doubtful accounts.

The Company believes that the accounting estimates related to the allowance for doubtful accounts are “critical accounting estimates” because the underlying assumptions used for the allowance can change from period to period and the changes in the allowance could potentially cause a material impact to the income statement and working capital.  The actual weather, commodity prices and other internal and external economic conditions, such as the mix of the customer base between residential, commercial and industrial, may vary significantly from management’s assumptions and may impact the ultimate collectibility of customer accounts.  Additionally, the regulatory environment allows certain customers to enter into long-term payment arrangements, the ultimate collectibility of which is difficult to determine.

Executive Performance Incentive Programs: The Company treats its Executive Performance Incentive Programs as variable plans.  The awards under the 2003 Executive Performance Incentive Program vested in December 2005.  The actual cost to be recorded for the 2005 Executive Performance Incentive Program (2005 Program) will not be known until the measurement date, which is in December 2008, requiring the Company to estimate the total expense to be recognized.  The number of units to be paid out under the 2005 Program is dependent upon a combination of a level of total shareholder return relative to the performance of a peer group and the Company’s average absolute return on capital during the four-year performance period.  The Company reviews these assumptions on a quarterly basis and adjusts its accrual for the 2005 Program when changes in these assumptions result in a material change in the value of the ultimate payout.  In the current period, the Company

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estimated that the performance measures would be met at 175% of the full value of the units for the 2005 Program and that the estimated end of 2008 share price would be $45.00.

The Company believes that the accounting estimate related to the 2005 Program is a “critical accounting estimate” because it is likely to change from period to period based on the market price of the Company’s shares and the performance of the peer group.  Additionally, the impact on net income of these changes could be material.  Management’s assumptions about future stock price and Company performance relative to the peer group requires significant judgment.  Each company’s inherent volatility combined with the volatility in commodity prices impact the ultimate amount of the payout and make it difficult to provide sensitivity metrics to demonstrate what impact a change in the Company’s stock price will have on the estimate.  However, assuming no change in the attainment of performance measures, a 10% increase in the Company’s stock price assumptions for December 31, 2008 would result in an increase in 2006 compensation expense under the 2005 Program of approximately $4 million.  A 10% decrease in the Company’s stock price assumptions would result in a decrease in 2006 compensation expense of the same amount.

Income Taxes: The Company accounts for income taxes under the provisions of SFAS No. 109, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s Consolidated Financial Statements or tax returns.  Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Please read Note 6 to the Company’s Consolidated Financial Statements for further discussion.

The Company has recorded deferred tax assets principally resulting from mark-to-market hedging losses recorded in other comprehensive loss, deferred revenues and expenses and state net operating loss carryforwards.  The Company has established a valuation allowance against the deferred tax assets related to the state net operating loss carryforwards, as it is believed that it is more likely than not that these deferred tax assets will not all be realized.  The Company also recorded a $15.3 million charge in 2005 related to compensation deferred and accrued under certain executive compensation plans, as it was determined that this compensation will not be deductible under Section 162(m) of the IRC.  No other valuation allowances have been established, as it is believed that future sources of taxable income, reversing temporary differences and other tax planning strategies will be sufficient to realize these assets.  Any change in the valuation allowance would impact the Company’s income tax expense and net income in the period in which such a determination is made.

The Company believes that the accounting estimate related to income taxes is a “critical accounting estimate” because the Company must assess the likelihood that deferred tax assets will be recovered from future taxable income, and to the extent that it is believed to be more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized, a valuation allowance must be established.  Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets.  The Company considers all available evidence, both positive and negative, to determine whether, based on the weight of the evidence, a valuation allowance is needed.  Evidence used includes information about the Company’s current financial position and results of operations for the current and preceding years, as well as all currently available information about future years, including the Company’s anticipated future performance, the reversal of deferred tax liabilities and tax planning strategies available to the Company.  To the extent that a valuation allowance is established or increased or decreased during a period, the Company must include an expense or benefit within tax expense in the income statement.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Derivative Commodity Instruments

The Company’s primary market risk exposure is the volatility of future prices for natural gas, which can affect the operating results of the Company primarily through the Equitable Supply segment and the unregulated marketing group within the Equitable Utilities segment.  The Company’s use of derivatives to reduce the effect of this volatility is described in Notes 1 and 3 to the Consolidated Financial Statements and under the caption “Commodity Risk Management” in Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 7) of this Form 10-K.  The Company uses simple, non-leveraged derivative commodity instruments that are placed

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with major financial institutions whose creditworthiness is continually monitored.  The Company also enters into energy trading contracts to leverage its assets and limit its exposure to shifts in market prices.  The Company’s use of these derivative financial instruments is implemented under a set of policies approved by the Company’s Corporate Risk Committee and Board of Directors.

For the derivative commodity instruments used to hedge the Company’s forecasted production, the Company sets policy limits relative to the expected production and sales levels, which are exposed to price risk.  The financial instruments currently utilized by the Company include futures contracts, swap agreements and collar agreements, which may require payments to or receipt of payments from counterparties based on the differential between a fixed and variable price for the commodity.  The Company also considers options and other contractual agreements in determining its commodity hedging strategy.  Management monitors price and production levels on a continuous basis and will make adjustments to quantities hedged as warranted.  In general, the Company’s strategy is to hedge production at prices considered to be favorable to the Company.  The Company attempts to take advantage of price fluctuations by hedging more aggressively when market prices move above historical averages and by taking more price risk when prices are significantly below these levels.  The goal of these actions is to earn a return above the cost of capital and to lower the cost of capital by reducing cash flow volatility.  To the extent that the Company has hedged its production at prices below the current market price, the Company is unable to benefit fully from increases in the price of natural gas.

For derivative commodity instruments held for trading purposes, the marketing group engages in financial transactions also subject to policies that limit the net positions to specific value at risk limits.  The financial instruments currently utilized by the Company for trading purposes include forward contracts and swap agreements.

With respect to the derivative commodity instruments held by the Company for purposes other than trading as of December 31, 2005, the Company had hedged portions of expected equity production through 2012 by utilizing futures contracts, swap agreements and collar agreements covering approximately 311.0 Bcf of natural gas.  See the “Commodity Risk Management” and “Capital Resources and Liquidity” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K for further discussion.  A decrease of 10% in the market price of natural gas from the December 31, 2005 levels would increase the fair value of natural gas instruments by approximately $268.3 million.  An increase of 10% in the market price of natural gas would decrease the fair value by approximately $282.1 million.

With respect to the derivative commodity instruments held by the Company for trading purposes as of December 31, 2005, an increase or decrease of 10% in the market price of natural gas from the December 31, 2005 levels would not have a significant impact on the fair value.

The Company determined the change in the fair value of the derivative commodity instruments using a method similar to its normal change in fair value as described in Note 1 to the consolidated financial statements.  The Company assumed a 10% change in the price of natural gas from its levels at December 31, 2005.  The price change was then applied to the derivative commodity instruments recorded on the Company’s balance sheet, resulting in the change in fair value.

The above analysis of the derivative commodity instruments held by the Company for purposes other than trading does not include the unfavorable impact that the same hypothetical price movement would have on the Company and its subsidiaries’ physical sales of natural gas.  The portfolio of derivative commodity instruments held for risk management purposes approximates the notional quantity of a portion of the expected or committed transaction volume of physical commodities with commodity price risk for the same time periods.  Furthermore, the derivative commodity instrument portfolio is managed to complement the physical transaction portfolio, reducing overall risks within limits.  Therefore, an adverse impact to the fair value of the portfolio of derivative commodity instruments held for risk management purposes associated with the hypothetical changes in commodity prices referenced above would be offset by a favorable impact on the underlying hedged physical transactions, assuming the derivative commodity instruments are not closed out in advance of their expected term, the derivative commodity instruments continue to function effectively as hedges of the underlying risk and the anticipated transactions occur as expected.

41

If the underlying physical transactions or positions are liquidated prior to the maturity of the derivative commodity instruments, a loss on the financial instruments may occur, or the derivative commodity instruments might be worthless as determined by the prevailing market value on their termination or maturity date, whichever comes first.

Other Market Risks

The Company has variable rate short-term debt.  As such, there is some exposure to future earnings due to changes in interest rates.  A 100 basis point increase or decrease in interest rates would not have a significant impact on future earnings of the Company under its current capital structure.  The Company maintains fixed rate long-term debt that is not subject to risk exposure from fluctuating interest rates.

The Company is exposed to credit loss in the event of nonperformance by counterparties to derivative contracts.  This credit exposure is limited to derivative contracts with a positive fair value.  NYMEX-traded futures contracts have minimal credit risk because futures exchanges are the counterparties.  The Company manages the credit risk of the other derivative contracts by limiting dealings to those counterparties who meet the Company’s criteria for credit and liquidity strength.

42

Item 8.Financial Statements and Supplementary Data

43

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Equitable Resources, Inc.

We have audited the accompanying consolidated balance sheets of Equitable Resources, Inc. and Subsidiaries as of December 31, 2005 and 2004, 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, 2005. Our audits also included the financial statement schedule listed in the Index at Item 15(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 auditing standards of the Public Company Accounting Oversight Board (United States).  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, 2005 and 2004, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with U.S. 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 discussed in Note 1 to the consolidated financial statements, in 2003, the Company adopted the provisions of Statement of Financial Accounting Standards No. 143, “Asset Retirement Obligations.”

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Equitable Resources, Inc.’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 10, 2006, expressed an unqualified opinion thereon.

Pittsburgh, Pennsylvania

February 10, 2006

44

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Equitable Resources, Inc.

We have audited management’s assessment, included in Management’s Report on Internal Control over Financial Reporting and appearing in the accompanying Item 9A Controls and Procedures, that Equitable Resources, Inc. maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Equitable Resources, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Equitable Resources, Inc. maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria.  Also, in our opinion, Equitable Resources, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Equitable Resources, Inc. and Subsidiaries as of December 31, 2005 and 2004, 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, 2005 and our report dated February 10, 2006 expressed an unqualified opinion thereon.

Pittsburgh, Pennsylvania

February 10, 2006

45

EQUITABLE RESOURCES, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED INCOME

YEARS ENDED DECEMBER 31,

	2005		2004			2003
	(Thousands except per share amounts)
Operating revenues	$	1,253,724	$	1,045,183		$	876,574
Cost of sales	511,169		412,050			299,017
Net operating revenues (see Note 1)	742,555		633,133			577,557
Operating expenses:
Operation and maintenance	95,369		87,988			76,319
Production	61,483		43,274			35,687
Selling, general and administrative	140,529		130,090			103,543
Office consolidation impairment chargesImpairment of long-lived assets	7,835		—			—
Depreciation, depletion and amortization	93,527		82,076			76,722
Total operating expenses (see Note 1)	398,743		343,428			292,271
Operating income	343,812		289,705			285,286
Gain on sale of available-for-sale securities, net	110,280		3,024			13,985
Gain on exchange of Westport for Kerr-McGee shares	—		217,212			—
Charitable foundation contribution	—		(18,226		)	(9,279		)
Equity in earnings of nonconsolidated investments:
Westport	—		—			3,614
Other	762		856			580
	762		856			4,194
Other income, net	1,195		3,692			—
Minority interest	—		—			(871		)
Interest expense	44,437		42,520			41,530
Income from continuing operations before income taxes and cumulative effect of accounting change	411,612		453,743			251,785
Income taxes	153,038		154,953			86,035
Income from continuing operations before cumulative effect of accounting change	258,574		298,790			165,750
Income (loss) from discontinued operations, net of tax of $10,485, ($12,259), and ($4,243) for the years ended December 31, 2005, 2004 and 2003, respectively	1,481		(18,936		)	7,807
Cumulative effect of accounting change, net of tax	—		—			(3,556		)
Net income	$	260,055	$	279,854		$	170,001
Earnings per share of common stock:
Basic:
Income from continuing operations before cumulative effect of accounting change	$	2.14	$	2.42		$	1.34
Income from discontinued operations	0.01		(0.15		)	0.06
Cumulative effect of accounting change, net of tax	—		—			(0.03		)
Net income	$	2.15	$	2.27		$	1.37
Diluted:
Income from continuing operations before cumulative effect of accounting change	$	2.09	$	2.37		$	1.31
Income from discontinued operations	0.01		(0.15		)	0.06
Cumulative effect of accounting change, net of tax	—		—			(0.03		)
Net income	$	2.10	$	2.22		$	1.34

See notes to consolidated financial statements.

46

EQUITABLE RESOURCES, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

YEARS ENDED DECEMBER 31,

	2005			2004			2003
	(Thousands)
Cash flows from operating activities:
Net income	$	260,055		$	279,854		$	170,001
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
(Income) loss from discontinued operations, net of tax	(1,481		)	18,936			(7,807		)
Cumulative effect of accounting change, net of tax.	—			—			3,556
Provision for losses on accounts receivable	8,273			19,659			13,460
Depreciation, depletion and amortization	93,527			82,076			76,722
Gain on sale of available-for-sale securities, net	(110,280		)	(3,024		)	(13,985		)
Office consolidation impairment charges	7,835			—			—
Deferred income taxes	(92,912		)	113,437			67,917
Gain on exchange of Westport for Kerr-McGee shares	—			(217,212		)	—
Charitable foundation contribution	—			18,226			9,279
Recognition of prepaid forward production revenue	—			(10,363		)	(55,705		)
Amendment of prepaid forward contract, net	—			(31,260		)	—
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues	(78,049		)	(69,024		)	(40,103		)
Margin deposits	(280,935		)	(32,463		)	(2,370		)
Inventory	(85,296		)	(45,420		)	(84,757		)
Prepaid expenses and other	(27,564		)	(16,360		)	(9,586		)
Regulatory assets	(2,847		)	506			11,897
Accounts payable	71,451			43,544			15,033
Deferred income taxes	(32,288		)	34,111			2,241
Pension settlements and contributionss	(20,364		)	—			(51,840		)
Changes in other assets and liabilities	29,404			45,901			2,355
Total adjustments	(521,526		)	(48,730		)	(63,693		)
Net cash (used in) provided by continuing operating activities	(261,471		)	231,124			106,308
Net cash (used in) provided by discontinued operating activities	(50,491		)	(51,126		)	22,253
Net cash (used in) provided by operating activities.	(311,962		)	179,998			128,561
Cash flows from investing activities:
Capital expenditures	(275,798		)	(201,813		)	(221,192		)
Purchase of interest in Eastern Seven Partners, L.P.	(57,500		)	—			—
Proceeds from sale of Kerr-McGee shares	460,467			42,880			—
Proceeds from sale of properties	141,991			—			6,550
Proceeds from sale of discontinued operations	80,000			—			—
Investment in available-for-sale securities	(4,009		)	—			—
Purchase of minority interest in Appalachian Basin Partners, L.P	—			—			(44,200		)
Proceeds from sale of Westport stock	—			—			38,419
Net cash provided by (used in) continuing investing activities	345,151			(158,933		)	(220,423		)
Net cash provided by discontinued investing activities.	2,595			439			5,096
Net cash provided by (used in) investing activities	347,746			(158,494		)	(215,327		)
Cash flows from financing activities:
Dividends paid	(99,737		)	(89,364		)	(60,419		)
Purchase of treasury stock	(122,250		)	(118,472		)	(55,235		)
Proceeds from exercises under employee compensation plans	25,016			26,776			39,155
Repayments and retirements of long-term debt	(10,000		)	(20,500		)	(24,316		)
Proceeds from issuance of long-term debt	150,000			—			200,000
Redemption of Trust Preferred Capital Securities	—			—			(125,000		)
Increase in short-term loans	69,801			95,899			93,600
Net cash provided by (used in) continuing financing activities	12,830			(105,661		)	67,785
Net cash provided by discontinued financing activities	26,352			49,863			45,107
Net cash provided by (used in) financing activities	39,182			(55,798		)	112,892
Net increase (decrease) in cash and cash equivalents	74,966			(34,294		)	26,126
Cash and cash equivalents at beginning of year	—			34,294			8,168
Cash and cash equivalents at end of year	$	74,966		$	—		$	34,294
Cash paid during the year for:
Interest (net of amount capitalized)	$	49,085		$	49,656		$	47,212
Income taxes	$	251,486		$	23,043		$	4,661

See notes to consolidated financial statements.

47

EQUITABLE RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,

	2005		2004
	(Thousands)
Assets
Current assets:
Cash and cash equivalents	$	74,966	$	—
Accounts receivable (less accumulated provision for doubtful accounts: 2005, $23,329; 2004, $29,836)	249,397		178,513
Unbilled revenues	58,958		45,905
Margin deposits with financial institutions	317,832		36,897
Inventory	289,921		204,625
Derivative instruments, at fair value	42,899		27,585
Prepaid expenses and other	60,732		33,168
Assets held for sale from discontinued operations	2,518		212,121
Total current assets	1,097,223		738,814
Equity in nonconsolidated investments	35,555		61,625
Property, plant and equipment:
Equitable Utilities	1,155,946		1,087,910
Equitable Supply	2,080,151		1,868,199
Total property, plant and equipment	3,236,097		2,956,109
Less: accumulated depreciation and depletion	1,152,892		1,080,978
Net property, plant and equipment	2,083,205		1,875,131
Investments, available-for-sale	25,194		426,772
Other assets:
Regulatory assets	70,055		67,208
Other	31,053		35,796
Total other assets	101,108		103,004
Total assets	$	3,342,285	$	3,205,346

See notes to consolidated financial statements.

48

EQUITABLE RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,

	2005			2004
	(Thousands)
Liabilities and Common Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	3,000		$	10,000
Short-term loans	365,300			295,499
Accounts payable	242,618			171,167
Derivative instruments, at fair value	1,264,204			350,382
Other current liabilities	217,374			134,314
Liabilities held for sale from discontinued operations	—			152,629
Total current liabilities	2,092,496			1,113,991
Debentures and medium-term notes	763,434			616,434
Deferred and other credits:
Deferred income taxes and investment tax credits	24,042			504,389
Other credits	107,845			95,860
Common stockholders’ equity:
Common stock, no par value, authorized 320,000 shares; shares issued: 2005 and 2004, 149,008	358,684			356,892
Treasury stock, shares at cost: 2005, 29,102; 2004, 26,946; (net of shares and cost held in trust for deferred compensation of 142, $2,429 and 1,284, $12,303)	(496,511		)	(389,450		)
Retained earnings	1,247,895			1,087,577
Accumulated other comprehensive loss	(755,600		)	(180,347		)
Total common stockholders’ equity	354,468			874,672
Total liabilities and common stockholders’ equity	$	3,342,285		$	3,205,346

See notes to consolidated financial statements.

49

EQUITABLE RESOURCES, INC. AND SUBSIDIARIES

STATEMENTS OF COMMON STOCKHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

	Common Stock								Accumulated Other			Common
	Shares Outstanding		No Par Value			Retained Earnings			Comprehensive (Loss) Income			Stockholders’ Equity
	(Thousands)
Balance, December 31, 2002	124,684		$	15,667		$	787,505		$	(24,533	)	$	778,639
Comprehensive income (net of tax):
Net income						170,001						170,001
Net change in cash flow hedges:
Natural gas, net of tax benefit of $38,674 (see Note 3)									(61,140		)	(61,140		)
Interest rate									(133		)	(133		)
Unrealized gain on available-for-sale securities:
Westport (a)									99,630			99,630
Other									2,310			2,310
Minimum pension liability adjustment, net of tax benefit of $448									(869		)	(869		)
Total comprehensive income												209,799
Westport cost basis adjustment (a)			52,857									52,857
Dividends ($0.485 per share)						(60,419		)				(60,419		)
Stock-based compensation plans, net	2,912		39,699									39,699
Stock repurchases	(2,864	)	(55,235		)							(55,235		)
Balance, December 31, 2003	124,732		52,988			897,087			15,265			965,340
Comprehensive income (net of tax):
Net income						279,854						279,854
Net change in cash flow hedges:
Natural gas, net of tax benefit of $82,277 (see Note 3)									(138,926		)	(138,926		)
Interest rate									397			397
Gain on exchange of Westport stock									(143,360		)	(143,360		)
Unrealized gain on available-for-sale securities:
Westport (to date of merger)									43,731			43,731
Kerr-McGee (from date of merger)									36,334			36,334
Other									371			371
Minimum pension liability adjustment, net of tax benefit of $3,009									5,841			5,841
Total comprehensive income												84,242
Dividends ($0.720 per share)						(89,364		)				(89,364		)
Stock-based compensation plans, net	2,030		32,926									32,926
Stock repurchases	(4,700	)	(118,472		)							(118,472		)
Balance, December 31, 2004	122,062		(32,558		)	1,087,577			(180,347		)	874,672
Comprehensive income (net of tax):
Net income						260,055						260,055
Net change in cash flow hedges:
Natural gas, net of tax benefit of $324,817 (see Note 3)									(543,716		)	(543,716		)
Interest rate									97			97
Unrealized gain on available-for-sale securities:
Kerr-McGee									(36,334		)	(36,334		)
Other									375			375
Minimum pension liability adjustment, net of tax benefit of $211									4,325			4,325
Total comprehensive loss												(315,198		)
Dividends ($0.820 per share)						(99,737		)				(99,737		)
Stock-based compensation plans, net	1,412		16,981									16,981
Stock repurchases	(3,568	)	(122,250		)							(122,250		)
Balance, December 31, 2005	119,906		$	(137,827	)	$	1,247,895		$	(755,600	)	$	354,468

Common shares authorized: 320,000,000 shares.  Preferred shares authorized: 6,000,000 shares.  There are no preferred shares issued or outstanding.

(a)Includes a reclassification of $52.9 million to common stock for the change in accounting treatment of the Company’s investment in Westport from the equity method to available-for-sale, effective March 31, 2003.  The Westport shares were subsequently exchanged during 2004 for Kerr-McGee shares (see Note 9). Except for those described in Note 3, there were no other reclassification adjustments for any other categories in 2005, 2004 and 2003.

See notes to consolidated financial statements.

50

EQUITABLE RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2005

1.Summary of Significant Accounting Policies

Principles of Consolidation: The Consolidated Financial Statements include the accounts of Equitable Resources, Inc. and all subsidiaries, ventures and partnerships in which a controlling equity interest is held (“Equitable” or “the Company”).  All significant intercompany accounts and transactions have been eliminated in consolidation.  Equitable utilizes the equity method of accounting for companies where its ownership is less than or equal to 50% and significant influence exists.

Reclassification: The Consolidated Financial Statements and related footnote disclosures have been reclassified to reflect the operating results of the NORESCO segment as discontinued operations for all periods presented.  See Note 7 for further information.  Additionally, certain previously reported amounts have been reclassified to conform to the current year presentation.

Stock Split: On September 1, 2005, the Company effected a two-for-one stock split payable to shareholders of record on August 12, 2005.  All share and per share information has been retroactively adjusted to reflect the stock split.

Use of Estimates:  The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes.  Actual results could differ from those estimates.

Cash Equivalents:  The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.  These investments are accounted for at cost.  Interest earned on cash equivalents is included as a reduction of interest expense.

Inventories:  The Company’s inventory balance consists of natural gas stored underground and materials and supplies recorded at the lower of average cost or market.

Property, Plant and Equipment: The Company’s property, plant and equipment consists of the following:

	December 31,
	2005		2004
	(Thousands)
Utility plant	$	1,148,063	$	1,085,476
Accumulated depreciation and amortization	392,877		366,124
Net utility plant	755,186		719,352
Gas and oil producing properties, successful efforts method	1,551,677		1,396,898
Accumulated depletion	518,426		488,742
Net oil and gas producing properties	1,033,251		908,156
Other properties, at cost less accumulated depreciation	294,768		247,623
Net property, plant and equipment	$	2,083,205	$	1,875,131

Utility property, plant and equipment, principally regulated property, is carried at cost. Depreciation is recorded using composite rates on a straight-line basis.  The overall rate of depreciation for the years ended December 31, 2005, and December 31, 2004, was approximately 4% of net Utility properties.

Oil and gas producing properties use the successful efforts method of accounting for production activities.  Under this method, the cost of productive wells, including mineral interests, wells and related equipment, development dry holes, as well as productive acreage, are capitalized and depleted on the unit-of-production method.  The depletion is calculated based on the annual actual production multiplied by the depletion rate per unit.

51

The depletion rate is derived by dividing the total costs capitalized over the number of units expected to be produced over the life of the reserves.  Equitable Supply calculates a single depletion field including all reserves located in Kentucky, West Virginia, Virginia and Pennsylvania.  Costs of exploratory dry holes, geological and geophysical, delay rentals and other property carrying costs are charged to expense.  The majority of the Company’s oil and gas producing properties consists of gas producing properties which were depleted at a rate of $0.59/Mcf and $0.54/Mcf produced for the years ended December 31, 2005, and December 31, 2004, respectively.

The carrying values of the Company’s proved oil and gas properties are reviewed for indications of impairment whenever events or circumstances indicate that the remaining carrying value may not be recoverable.  In order to determine whether impairment has occurred, the Company estimates the expected future cash flows (on an undiscounted basis) from its proved oil and gas properties and compares them to their respective carrying values.  The estimated future cash flows used to test those properties for recoverability are based on proved reserves utilizing assumptions about the use of the asset and forward market prices for oil and gas.  Proved oil and gas properties that have carrying amounts in excess of estimated future cash flows are deemed unrecoverable.  Those properties are then written down to fair value, which is estimated using assumptions that marketplace participants would use in their estimates of fair value.  In developing estimates of fair value, the Company used forward market prices.  For the years ended December 31, 2005, 2004 and 2003, the Company did not recognize impairment charges on oil and gas properties.

Additionally, the costs of unproved oil and gas properties are periodically assessed on a field-by-field basis.  If unproved properties are determined to be productive, the related costs are transferred to proved oil and gas properties.  If unproved properties are determined not to be productive, or if the value has been otherwise impaired, the excess carrying value is charged to expense.  For additional information on oil and gas properties, see Note 25 (unaudited).

The Company also had $294.8 million and $247.6 million of other net property at December 31, 2005, and December 31, 2004, respectively.  These items are carried at cost and depreciation is calculated using the straight-line method based on estimated service lives.  This property consists largely of gathering systems (25 year estimated service life), buildings (35 year estimated service life), office equipment (3-7 year estimated service life), vehicles (5 year estimated service life), and computer and telecommunications equipment and systems (3-7 year estimated service life).

Planned major maintenance projects that do not increase the overall life of the related assets are expensed.  When the major maintenance materially increases the life or value of the underlying asset, the cost is capitalized.

Sales and Retirements Policies:  No gain or loss is recognized on the partial sale of oil and gas reserves from the depletion pool unless non-recognition would significantly alter the relationship between capitalized costs and remaining proved reserves for the affected amortization base.  When gain or loss is not recognized, the amortization base is reduced by the amount of the proceeds.

Regulatory Accounting:  The Company’s distribution operations are subject to comprehensive regulation by the PA PUC and the Public Service Commission of West Virginia.  The Company also provides field line service, also referred to as “farm tap” service, in Kentucky which is subject only to rate regulation by the Kentucky Public Service Commission.  The Company’s interstate pipeline operations are subject to regulation by the FERC.  Accounting for the Company’s regulated operations is performed in accordance with the provisions of SFAS No. 71.  The application of this accounting policy allows the Company to defer expenses and income on its Consolidated Balance Sheets as regulatory assets and liabilities when it is probable that those expenses and income will be allowed in the rate setting process in a period different from the period in which they would have been reflected in the Statements of Consolidated Income for a non-regulated company.  The deferred regulatory assets and liabilities are then recognized in the Statements of Consolidated Income in the period in which the same amounts are reflected in rates.

52

Where permitted by regulatory authority under purchased natural gas adjustment clauses or similar tariff provisions, the Company defers the difference between its purchased natural 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.  Such amounts are reflected on the Company’s Consolidated Balance Sheets as other current assets or liabilities.

When any portion of the Company’s distribution or pipeline operations ceases to meet the criteria for application of regulatory accounting treatment for all or part of their operations, the regulatory assets and liabilities related to those portions are eliminated from the Consolidated Balance Sheets and are included in the Statements of Consolidated Income in the period in which the discontinuance of regulatory accounting treatment occurs.

The following table presents the total regulated net revenue and operating expenses of the Company:

	Years Ended December 31,
	2005		2004		2003
	(Thousands)
Distribution revenues	$	469,102	$	422,438	$	396,203
Pipeline revenues	57,534		55,123		52,926
Total regulated revenue	526,636		477,561		449,129
Distribution purchased gas costs	312,244		263,313		231,017
Pipeline purchased gas costs	3,767		—		—
Total purchased gas costs	316,011		263,313		231,017
Distribution net revenue	156,858		159,125		165,186
Pipeline net revenue	53,767		55,123		52,926
Total regulated net revenue	210,625		214,248		218,112
Distribution operating expenses	116,536		102,248		102,093
Pipeline operating expenses	36,422		30,467		30,511
Total regulated operating expenses	$	152,958	$	132,715	$	132,604

Derivative Instruments:  Derivatives are held as part of a formally documented risk management program.  The Company’s risk management activities are subject to the management, direction and control of the Company’s Corporate Risk Committee (CRC).  The CRC reports to the Audit Committee of the Board of Directors and is comprised of the chief executive officer, the executive vice-president of finance and administration, the chief financial officer and other officers and employees.

The Company’s risk management program includes the consideration and, when appropriate, the use of (i) exchange-traded natural gas futures contracts and options and OTC natural gas swap agreements and options (collectively, derivative commodity instruments) to hedge exposures to fluctuations in natural gas prices and for trading purposes and (ii) interest rate swap agreements to hedge exposures to fluctuations in interest rates.  At contract inception, the Company designates its derivative instruments as hedging or trading activities.

All derivative instruments are accounted for in accordance with SFAS No. 133.  As a result, the Company recognizes all derivative instruments as either assets or liabilities and measures the effectiveness of the hedges, or the degree that the gain (loss) for the hedging instrument offsets the loss (gain) on the hedged item, at fair value.  If the gain (loss) for the hedging instrument is greater than the loss (gain) on the hedged item, hedge ineffectiveness is recorded.  The measurement of fair value is based upon actively quoted market prices when available.  In the absence of actively quoted market prices, the Company seeks indicative price information from external sources, including broker quotes and industry publications.  If pricing information from external sources is not available,

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measurement involves judgment and estimates.  These estimates are based upon valuation methodologies deemed appropriate by the Company’s CRC.  The Company assesses the effectiveness of hedging relationships both at the inception of the hedge and on an on-going basis.

The accounting for the changes in fair value of the Company’s derivative instruments depends on the use of the derivative instruments.  To the extent that a derivative instrument has been designated and qualifies as a cash flow hedge, the effective portion of the change in fair value of the derivative instrument is reported as a component of accumulated other comprehensive income (loss), net of tax, and is subsequently reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings.  The ineffective portion of the cash flow hedge is immediately recognized in operating revenues in the Statements of Consolidated Income.  If a cash flow hedge is terminated before the settlement date of the hedged item, the amount of accumulated other comprehensive income (loss) recorded up to that date would remain accrued provided that the forecasted transaction remains probable of occurring, and going forward, the change in fair value of the derivative instrument would be recorded in earnings.  The derivative instruments that comprise the amount recorded in accumulated other comprehensive income (loss) have been designated and qualify as cash flow hedges.  The Company reports all gains and losses on its energy trading contracts net on its Statements of Consolidated Income in accordance with EITF No. 02-3.

Capitalized Interest:  Interest costs for the construction of certain long-term assets are capitalized and amortized over the related assets’ estimated useful lives.  Interest costs during 2005, 2004 and 2003 of $0.2 million, $0.1 million and $0.5 million, respectively, were capitalized as a portion of the cost of the related long-term assets.

Impairment of Long-Lived Assets:  In accordance with SFAS No. 144, whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the Company reviews its long-lived assets for impairment by first comparing the carrying value of the assets to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the assets.  If the carrying value exceeds the sum of the assets’ undiscounted cash flows, the Company estimates an impairment loss by taking the difference between the carrying value and fair value of the assets.

Stock-Based Compensation:  The Company accounted for its stock options and awards under the intrinsic-value-based method as defined in APB No. 25 for the fiscal years ended December 31, 2005, 2004 and 2003.  Accordingly, no compensation cost for fixed stock options is included in net income since all award grants were made at the fair value on the date of grant.  Compensation expense for restricted share awards is ratably recognized over the vesting period, based on the fair value of the stock on the date of grant.  The Company applies the disclosure provisions of SFAS No. 123 and SFAS No. 148.

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The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to employee stock-based awards.  Refer to Note 16 for more information regarding stock-based compensation.

	Year Ended December 31,
	2005			2004			2003
	(Thousands, except per share amounts)
Net income, as reported	$	260,055		$	279,854		$	170,001
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects	32,181			20,374			11,879
Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax effects	(33,693		)	(24,575		)	(18,015		)
Pro Forma net income	$	258,543		$	275,653		$	163,865
Earnings per share:
Basic, as reported	$	2.15		$	2.27		$	1.37
Basic, pro forma	$	2.13		$	2.23		$	1.32
Diluted, as reported	$	2.10		$	2.22		$	1.34
Diluted, pro forma	$	2.09		$	2.18		$	1.29

Revenue Recognition:  Sales of natural gas to utility customers are billed on a monthly cycle basis; however, the billing cycle periods for certain customers do not necessarily coincide with accounting periods used for financial reporting purposes.  The Company follows the revenue accrual method of accounting for utility segment revenue whereby revenues applicable to gas delivered to customers but not yet billed under the cycle billing method are estimated and accrued and the related costs are charged to expense.  Revenue is recognized for production activities when deliveries of natural gas, crude oil and natural gas liquids are made.  Revenues from natural gas transportation and storage activities are recognized in the period service is provided.  Revenues from energy marketing activities are recognized when deliveries occur.  In accordance with EITF No. 02-3, only revenues associated with energy trading activities that do not result in physical delivery of an energy commodity (i.e. are settled in cash) are recorded using mark-to-market accounting.  The revenues associated with the physical delivery of an energy commodity are recognized at contract value when delivered.  Revenues associated with the Company’s natural gas advance sales contracts are recognized as natural gas is gathered and delivered.

Investments:  Investments in companies in which the Company has the ability to exert significant influence over operating and financial policies (generally 20% to 50% ownership) are accounted for using the equity method. Under the equity method, investments are initially recorded at cost and adjusted for dividends and undistributed earnings and losses.  These investments are classified as equity in nonconsolidated investments on the Consolidated Balance Sheets.

Other investments in equity securities which are generally under 20% ownership and where the Company does not exert significant influence over operating and financial polices are accounted for as available-for-sale in accordance with SFAS No. 115 and are classified as investments, available-for-sale on the Consolidated Balance Sheets.  Available-for-sale securities are required to be carried at fair value, with any unrealized gains and losses reported on the Consolidated Balance Sheets within a separate component of equity, accumulated other comprehensive income (loss).  The Company utilizes the specific identification method to determine the cost of the securities sold.

APB No. 18 requires a company to recognize a loss in the value of an equity method investment that is other than a temporary decline.  The Company analyzes its equity method investments based on its share of estimated future cash flows from the investment to determine whether the carrying amount will be recoverable.  In accordance

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with SFAS No. 115, the Company continually reviews its available-for-sale investments to determine whether a decline in fair value below the cost basis is other than temporary.  If the decline in fair value is judged to be other than temporary, the cost basis of the security is written down to fair value and the amount of the write-down is included in the Statements of Consolidated Income.  No other than temporary decline in fair value was recorded in 2005, 2004 or 2003.

Income Taxes:  The Company files a consolidated Federal income tax return and utilizes the asset and liability method to account for income taxes.  The provision for income taxes represents amounts paid or estimated to be payable, net of amounts refunded or estimated to be refunded, for the current year and the change in deferred taxes.  Any refinements to prior years’ taxes made due to subsequent information are reflected as adjustments in the current period.  Separate effective income tax rates are calculated for income from continuing operations, discontinued operations and cumulative effects of accounting changes.

Deferred income tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities in accordance with SFAS No. 109 which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of such temporary differences.  SFAS No. 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.  Where deferred tax liabilities will be passed through to customers in regulated rates, the Company establishes 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.

Allowance for Doubtful Accounts:  Judgment is required to assess the ultimate realization of the Company’s accounts receivable, including assessing the probability of collection and the credit-worthiness of certain customers.  Reserves for uncollectible accounts are recorded as part of selling, general and administrative expense on the Statements of Consolidated Income.  The reserves are based on historical experience, current and expected economic trends and specific information about customer accounts.  Accordingly, actual results may differ from these estimates under different assumptions or conditions.

Earnings Per Share (EPS):  Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding during the period, without considering any dilutive items.  Diluted EPS is computed by dividing net income adjusted for the assumed conversion of debt by the weighted average number of common shares and potentially dilutive securities, net of shares assumed to be repurchased using the treasury stock method.  Purchases of treasury shares are calculated using the average share price for the Company’s common stock during the period.  Potentially dilutive securities arise from the assumed conversion of outstanding stock options and awards.  See Note 14 for a detailed calculation.

Asset Retirement Obligations:  Effective January 1, 2003, the Company adopted SFAS No. 143, the primary impact of which was to change the method of accruing for well plugging and abandonment costs.  These costs were formerly recognized as a component of depreciation, depletion and amortization (DD&A) expense with a corresponding credit to accumulated depletion in accordance with SFAS No. 19.  SFAS No. 143 requires that the fair value of the Company’s plugging and abandonment obligations be recorded at the time the obligations are incurred, which is typically at the time the wells are drilled.  Upon initial recognition of an asset retirement obligation, the Company will increase the carrying amount of the long-lived asset by the same amount as the liability.  Over time, the liabilities are accreted for the change in their present value, through charges to DD&A, and the initial capitalized costs are depleted over the useful lives of the related assets.

The adoption of SFAS No. 143 by the Company resulted in an after-tax charge to earnings of $3.6 million, or $0.03 per diluted share, which is reflected as a cumulative effect of accounting change in the Company’s Statement of Consolidated Income for the year ended December 31, 2003.  In addition to the charge to earnings, the depletion rate in the Company’s Supply segment increased by $0.03 per Mcfe.

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The following table presents a reconciliation of the beginning and ending carrying amounts of the Company’s asset retirement obligations.  The Company does not have any assets that are legally restricted for purposes of settling these obligations.

	Year ended December 31, 2005
	(Thousands)
Asset retirement obligation as of beginning of period	$	31,857
Accretion expense	2,098
Liabilities incurred	731
Change in well plugging cost assumptions	15,463
Liabilities settled	(4,023		)
Asset retirement obligation as of end of period	$	46,126

Self Insurance: The Company is self-insured for certain losses related to workers’ compensation.  The Company maintains stop loss coverage with third-party insurers to limit the total exposure for general liability, automobile liability, environmental liability and workers’ compensation.  The recorded reserves represent estimates of the ultimate cost of claims incurred as of the balance sheet date.  The estimated liabilities are based on analyses of historical data and actuarial estimates and are not discounted.  The liabilities are reviewed by management quarterly and by independent actuaries annually to ensure that they are appropriate.  While the Company believes these estimates are reasonable based on the information available, financial results could be impacted if actual trends, including the severity or frequency of claims or fluctuations in premiums, differ from estimates.

Recently Issued Accounting Standards:

Stock Compensation

On December 16, 2004, the FASB issued SFAS No. 123(R) and has issued several subsequent Staff Positions clarifying this guidance.  This guidance replaced previously existing requirements under SFAS No. 123 and APB No. 25.  Under SFAS No. 123(R), an entity must recognize the compensation cost related to employee services received in exchange for all forms of share-based payments to employees, including employee stock options, as an expense in its income statement.  The compensation cost of the award would generally be measured based on the grant-date fair value of the award.  The Company will be required to adopt SFAS No. 123(R) in the first quarter of 2006.  The Company intends to use the modified prospective method for adoption of SFAS No. 123(R) as permitted by the guidance.

The Company has determined that the impact of SFAS No. 123(R) and related guidance will not be material to its financial statements.  In accordance with SFAS No. 123, the Company has historically disclosed the impact on the Company’s net income and earnings per share had the fair value based method been adopted.  Had the Company adopted SFAS No. 123(R) in prior periods, the impact of that standard on periods presented in these Consolidated Financial Statements would have approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earnings per share presented earlier in Note 1 under “Stock-Based Compensation.”

Accounting for Uncertain Tax Positions

In July 2005, the FASB issued an exposure draft of a proposed interpretation, “Accounting for Uncertain Tax Positions – an Interpretation of FASB Statement No. 109.”   The proposed interpretation would apply to all open tax positions accounted for in accordance with SFAS No. 109, including those acquired in business combinations.  In October 2005, the FASB decided to postpone issuance of the final interpretation until fiscal year 2006.  The Company will evaluate the impact of any change in accounting standard on the Company’s financial position and results of operations when the final interpretation is issued.

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Earnings Per Share

In September 2005, the FASB issued an exposure draft of a proposed amendment to SFAS No. 128.  The proposed amendment would clarify guidance for calculating earnings per share in regards to mandatorily convertible instruments, the treasury stock method, contracts that may be settled in cash or shares and contingently issuable shares.  Under the exposure draft, the proposed amendment would become effective for the Company in the second quarter of 2006.  The Company will evaluate the impact of any change in accounting standard when the final interpretation is issued.

2.Financial Information by Business Segment

Operating segments are revenue-producing components of the enterprise for which separate financial information is produced internally and are subject to evaluation by the Company’s chief executive officer (chief operating decision maker) in deciding how to allocate resources.  The Company reports its operations in two segments, which reflect its lines of business.  The Equitable Utilities segment’s operations comprise the sale and transportation of natural gas to customers at state-regulated rates, interstate pipeline gathering, transportation and storage of natural gas subject to federal regulation, the unregulated marketing of natural gas and limited trading activities.  The Equitable Supply segment’s activities comprise the development, production, gathering, marketing and sale of natural gas and a small amount of associated oil and the extraction and sale of natural gas liquids.

Operating segments are evaluated on their contribution to the Company’s consolidated results based on operating income, equity in earnings of nonconsolidated investments, minority interest, and other income, net.  Interest expense and income taxes are managed on a consolidated basis.  Headquarters’ costs are billed to the operating segments based upon a fixed allocation of the headquarters’ annual operating budget.  Differences between budget and actual headquarters’ expenses are not allocated to the operating segments.

Substantially all of the Company’s operating revenues, income from continuing operations and assets are generated or located in the United States.

	Years Ended December 31,
	2005			2004			2003
	(Thousands)
Revenues from external customers:
Equitable Utilities	$	863,311		$	731,861		$	613,368
Equitable Supply	489,191			390,428			332,434
Less: intersegment revenues (a)	(98,778		)	(77,106		)	(69,228		)
Total	$	1,253,724		$	1,045,183		$	876,574
Total operating expenses:
Equitable Utilities	$	155,110		$	134,556		$	135,244
Equitable Supply	195,610			163,059			136,639
Unallocated expenses (b)	48,023			45,813			20,388
Total	$	398,743		$	343,428		$	292,271
Operating income:
Equitable Utilities	$	98,254		$	108,149		$	109,879
Equitable Supply	293,581			227,369			195,795
Unallocated expenses (b)	(48,023		)	(45,813		)	(20,388		)
Total operating income	$	343,812		$	289,705		$	285,286

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	Years Ended December 31,
	2005		2004			2003
	(Thousands)
Reconciliation of operating income to net income:
Equity in earnings of nonconsolidated investments, excluding Westport:
Equitable Supply	$	493	$	688		$	431
Unallocated	269		168			149
Total	$	762	$	856		$	580
Other income, net:
Equitable Supply	$	—	$	576		$	—
Unallocated (c)	1,195		3,116			—
Total	$	1,195	$	3,692		$	—
Minority interest:
Equitable Supply	$	—	$	—		$	(871	)
Total	$	—	$	—		$	(871	)
Gain on sale of available-for-sale securities, net	110,280		3,024			13,985
Gain on exchange of Westport for Kerr-McGee shares	—		217,212			—
Charitable foundation contribution	—		(18,226		)	(9,279		)
Westport equity earnings	—		—			3,614
Interest expense	44,437		42,520			41,530
Income taxes	153,038		154,953			86,035
Income from continuing operations before cumulative effect of accounting change	258,574		298,790			165,750
Income (loss) from discontinued operations	1,481		(18,936		)	7,807
Cumulative effect of accounting change, net of tax (d)	—		—			(3,556		)
Net income	$	260,055	$	279,854		$	170,001

	As of December 31,
	2005		2004
	(Thousands)
Segment assets:
Equitable Utilities	$	1,412,215	$	1,173,374
Equitable Supply	1,844,883		1,416,212
Total operating segments	3,257,098		2,589,586
Headquarters assets, including cash and short-term investments	82,669		403,639
Total operating assets	3,339,767		2,993,225
Assets held for sale from discontinued operations	2,518		212,121
Total assets	$	3,342,285	$	3,205,346

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	Years Ended December 31,
	2005			2004		2003
	(Thousands)
Significant noncash expense (income) items:
Equitable Utilities:
Increase in deferred purchased natural gas cost	$	35,806		$	13,270	$	3,553
(Decrease) increase in regulatory asset valuation allowance	(204		)	6,004		—
Impairment charges (e)	3,841			—		—
Equitable Supply:
Impairment charges (e)	519			—		—
Unallocated:
Impairment charges (e)	3,475			—		—
Total	$	43,437		$	19,274	$	3,553
Depreciation, depletion and amortization:
Equitable Utilities	$	27,874		$	25,629	$	27,583
Equitable Supply	64,897			55,836		48,748
Other	756			611		391
Total	$	93,527		$	82,076	$	76,722
Expenditures for segment assets:
Equitable Utilities	$	61,349		$	56,274	$	60,414
Equitable Supply (f)	264,095			141,661		204,527
Other	7,854			3,878		451
Total	$	333,298		$	201,813	$	265,392

(a)Intersegment revenues primarily represent sales from Equitable Supply to the unregulated marketing affiliate of Equitable Utilities.

(b)Unallocated expenses consist primarily of certain performance-related incentive costs and administrative costs that are not allocated to the operating segments.  For the year ended December 31, 2004, unallocated expenses also include $13.4 million related to the settlement of the cash balance portion of a defined benefit pension plan as more fully discussed in Note 13.

(c)Unallocated other income, net for the years ended December 31, 2005 and 2004 relates to pre-tax dividend income of $1.2 million and $3.1 million, respectively, for the Kerr-McGee Corporation shares held by the Company during those periods.

(d)Net income for the year ended December 31, 2003 has been adjusted to reflect the cumulative effect of an accounting change related to the adoption of Statement No. 143.  See Note 1.

(e)The impairment charges for the year ended December 31, 2005 relate to the consolidation of the Company’s administrative operations in a building at the North Shore in Pittsburgh, Pennsylvania.  See Note 21.

(f)Capital expenditures for 2005 include $57.5 million for the acquisition of the 99% limited partnership interest in Eastern Seven Partners, L.P.  Capital expenditures for 2003 include $44.2 million for the acquisition of the remaining 31% limited partner interest in Appalachian Basin Partners, L.P.  See Note 5.

3.Derivative Instruments

Derivative Commodity Instruments

The various derivative commodity instruments used by the Company to hedge its exposure to variability in expected future cash flows associated with the fluctuations in the price of natural gas related to the Company’s forecasted sale of equity production and forecasted natural gas purchases and sales have been designated and qualify as cash flow hedges.  Futures contracts obligate the Company to buy or sell a designated commodity at a future date for a specified price and quantity at a specified location.  Swap agreements involve payments to or receipts from

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counterparties based on the differential between a fixed and variable price for the commodity.  Collar agreements require the counterparty to pay the Company if the index price falls below the floor price and the Company to pay the counterparty if the index price rises above the cap price.  Exchange-traded instruments are generally settled with offsetting positions but may be settled by delivery or receipt of commodities.  OTC arrangements require settlement in cash.  The fair value of these derivative commodity instruments was a $36.0 million asset and a $1.2 billion liability as of December 31, 2005, and a $26.8 million asset and a $350.4 million liability as of December 31, 2004.  These amounts are included in the Consolidated Balance Sheets as derivative instruments, at fair value.  The net amount of derivative instruments, at fair value changed from a net liability of $323.6 million at December 31, 2004 to a net liability of $1.2 billion at December 31, 2005, primarily as a result of the increase in natural gas prices.  The absolute quantities of the Company’s derivative commodity instruments that have been designated and qualify as cash flow hedges totaled 383.5 Bcf and 432.6 Bcf as of December 31, 2005 and 2004, respectively, and are primarily related to natural gas swaps.  The open positions at December 31, 2005 had maturities extending through December 2012.

The Company had deferred net losses of $741.0 million and $197.3 million in accumulated other comprehensive loss, net of tax, as of December 31, 2005 and 2004, respectively, associated with the effective portion of the change in fair value of its derivative commodity instruments designated as cash flow hedges.  Assuming no change in price or new transactions, the Company estimates that approximately $267.2 million of net unrealized losses on its derivative commodity instruments reflected in accumulated other comprehensive loss, net of tax, as of December 31, 2005 will be recognized in earnings during the next twelve months due to the physical settlement of hedged transactions.  This recognition occurs through a reduction in the Company’s net operating revenues resulting in the average hedged price becoming the realized sales price.

During the year ended December 31, 2005, the net change in accumulated other comprehensive loss related to derivatives was a loss of $543.7 million, net of tax.  This was comprised of a $147.2 million net realized loss which was reclassified from accumulated other comprehensive loss to earnings and a net unrealized loss of $690.9 million.  During the year ended December 31, 2004, the net change in accumulated other comprehensive loss related to derivatives was a loss of $138.9 million, net of tax.  This was comprised of a $43.6 million net realized loss which was reclassified from accumulated other comprehensive loss to earnings and a net unrealized loss of $182.5 million.  During the year ended December 31, 2003, the net change in accumulated other comprehensive loss related to derivatives was a loss of $61.1 million, net of tax.  This was comprised of a $28.8 million net realized loss which was reclassified from accumulated other comprehensive loss to earnings and a net unrealized loss of $89.9 million.

For the years ended December 31, 2005, 2004 and 2003, ineffectiveness associated with the Company’s derivative instruments designated as cash flow hedges decreased earnings by approximately $0.1 million, $2.0 million and $2.9 million, respectively.  These amounts are included in operating revenues in the Statements of Consolidated Income.

The Company conducts trading activities through its unregulated marketing group.  The function of the Company’s trading business is to contribute to the Company’s earnings by taking market positions within defined limits subject to the Company’s corporate risk management policy.  At December 31, 2005, the absolute notional quantities of the futures and swaps held for trading purposes totaled 9.9 Bcf and 36.4 Bcf, respectively.

Below is a summary of the activity of the fair value of the Company’s derivative commodity contracts with third parties held for trading purposes during the year ended December 31, 2005 (in thousands).

Fair value of contracts outstanding as of December 31, 2004	$	481
Contracts realized or otherwise settled	(1,155		)
Other changes in fair value	344
Fair value of contracts outstanding as of December 31, 2005	$	(330	)

There were no adjustments to the fair value of the Company’s derivative contracts held for trading purposes relating to changes in valuation techniques and assumptions during the years ended December 31, 2005 and 2004.

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The following table presents the maturities and the fair valuation source for the Company’s derivative instruments that were held for trading purposes as of December 31, 2005.

Net Fair Value of Third Party Contract (Liabilities) Assets at Period-End

Source of Fair Value	Maturity Less than 1 Year			Maturity 1-3 Years			Maturity 4-5 Years		Maturity in Excess of 5 Years		Total Fair Value
	(Thousands)
Prices actively quoted (NYMEX) (1)	$	(452	)	$	359		$	—	$	—	$	(93	)
Prices provided by other external sources (2)	(230		)	(7		)	—		—		(237		)
Net derivative (liabilities) assets	$	(682	)	$	352		$	—	$	—	$	(330	)

(1)Contracts include futures and fixed price swaps

(2)Contracts include basis swaps

The overall portfolio of the Company’s energy derivatives held for risk management purposes approximates the notional quantity of a portion of the expected or committed transaction volume of physical commodities with commodity price risk for the same time periods.  Furthermore, the energy derivative portfolio is managed to complement the physical transaction portfolio, reducing overall risks within limits.  Therefore, an adverse impact to the fair value of the portfolio of energy derivatives held for risk management purposes associated with the hypothetical changes in commodity prices referenced above would be offset by a favorable impact on the underlying physical transactions, assuming the energy derivatives are not closed out in advance of their expected term, the energy derivatives continue to function effectively as hedges of the underlying risk and the anticipated transactions occur as expected.

As part of the purchase of the limited partnership interest in Eastern Seven Partners, L.P. (ESP) as discussed in Note 5, the Company assumed derivative liabilities of $47.3 million for the fair value of ESP’s hedges.  These hedges were effectively closed out at acquisition by the purchase of offsetting positions.  The Company does not treat these derivatives as hedging instruments under SFAS No. 133.  The fair value of these derivative instruments at December 31, 2005 was a $34.0 million liability.  These amounts are included in the Consolidated Balance Sheet as derivative instruments, at fair value.

In May 2005, the Company sold certain non-core gas properties, as discussed in Note 4.  As part of this transaction, the Company closed out certain cash flow hedges associated with forecasted production at these locations by purchasing offsetting positions.  The Company does not treat these derivatives as hedging instruments under SFAS No. 133.  The fair value of these derivative instruments at December 31, 2005 was a $20.7 million liability.  These amounts are included in the Consolidated Balance Sheet as derivative instruments, at fair value.

When the net fair value of any of the Company’s swap agreements represents a liability to the Company which is in excess of the agreed-upon threshold between the Company and the financial institution acting as counterparty, the counterparty requires the Company to remit funds to the counterparty as a margin deposit for the derivative liability which is in excess of the threshold amount.  The Company recorded such deposits in the amount of $267.9 million and $36.0 million in its Consolidated Balance Sheets as of December 31, 2005 and 2004, respectively.

When the Company enters into exchange-traded natural gas contracts, exchanges require participants, including the Company, to remit funds to the corresponding broker as good-faith deposits to guard against the risks associated with changing market conditions.  Participants must make such deposits based on an established initial margin requirement as well as the net liability position, if any, of the fair value of the associated contracts.  In the case where the fair value of such contracts is in a net asset position, the broker may remit funds to the Company, in which case the Company records a current liability for such amounts received.  The initial margin requirements are established by the exchanges based on prices, volatility and the time to expiration of the related contract and are

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subject to change at the exchanges’ discretion.  The Company recorded such deposits in the amount of $49.9 million and $0.9 million in its Consolidated Balance Sheets as of December 31, 2005 and 2004, respectively.  The Company also recorded a liability of $5.1 million in accounts payable as of December 31, 2004, representing amounts received from one of the brokers as a result of the related contracts having a positive fair value.

Other Derivative Instruments

In July 2004, the Company entered into three 7.5 year secured variable share forward transactions.  Each transaction had a different counterparty, covered 2.0 million shares of Kerr-McGee Corporation (Kerr-McGee) common stock, contained a collar and permitted receipt of an amount up to the net present value of the floor price prior to maturity.  Upon maturity of each transaction, the Company was obligated to deliver to the applicable counterparty, at the Company’s option, no more than 2.0 million Kerr-McGee shares or cash in an equivalent value.  The collars effectively limited the Company’s cash flow exposure upon the forecasted disposal of 6.0 million Kerr-McGee shares.  A variable portion of the dividends received on the underlying Kerr-McGee shares was paid to each counterparty depending upon the hedged position of such counterparty.

In May 2005, the Company terminated the three variable share forward transactions.  In connection with the termination, the Company incurred a termination cost of $95.8 million and sold 4.3 million Kerr-McGee shares to its three counterparties to cover its counterparties’ respective hedged positions.  See Note 9 for further discussion of transactions related to the Kerr-McGee shares.

4.Sale of Properties

In May 2005, the Company sold certain non-core gas properties and associated gathering assets for approximately $142 million after purchase price adjustments.  In accordance with SFAS No. 19, this sale of only a portion of the Company’s gas properties was treated as a normal retirement with no gain or loss recognized, as doing so did not significantly affect the depletion rate.  See Note 25 for further discussion of changes to the Company’s reserves during 2005.

5.Acquisitions

In January 2005, the Company purchased the limited partnership interest in ESP for cash of $57.5 million and assumed liabilities of $47.3 million.

In February 2003, the Company purchased the remaining 31% limited partnership interest in Appalachian Basin Partners, L.P. (ABP), a partnership that was formed in November 1995 when the Company monetized Appalachian gas properties qualifying for the nonconventional fuels tax credit, for $44.2 million.

See Note 25 for further discussion of changes to the Company’s reserves during 2005.

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6.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,
	2005			2004
	(Thousands)
Deferred tax liabilities (assets):
Drilling and development costs expensed for income tax reporting	$	328,410		$	311,199
Other comprehensive loss	(455,215		)	(113,558		)
Tax depreciation in excess of book depreciation	140,233			206,557
Regulatory temporary differences	23,375			26,935
Deferred purchased gas cost	10,196			4,657
Deferred compensation plans	(2,235		)	(9,252		)
Charitable contributions	—			(6,421		)
Alternative minimum tax	—			(3,900		)
Investment tax credit	(3,921		)	(4,341		)
Uncollectible accounts	(8,211		)	(12,646		)
Postretirement benefits	(4,348		)	(7,972		)
Kerr-McGee book basis in excess of tax basis	—			105,137
Other	(12,470		)	(11,032		)
Total (including amounts classified as current liabilities of $1,736 and current assets of $7,989 for 2005 and 2004, respectively)	$	15,814		$	485,363

The net deferred tax asset relating to the Company’s accumulated other comprehensive loss balance as of December 31, 2005 was comprised of a $445.7 million deferred tax asset related to the Company’s net unrealized loss from hedging transactions, a $10.4 million deferred tax asset related to the minimum pension adjustment and a $0.9 million deferred tax liability related the Company’s net unrealized gain on available-for-sale securities.  The net deferred tax asset relating to the Company’s other comprehensive loss balance as of December 31, 2004 was comprised of a $121.2 million deferred tax asset related to the Company’s net unrealized loss from hedging transactions, an $11.0 million deferred tax asset related to the minimum pension adjustment and an $18.6 million deferred tax liability related to the Company’s net unrealized gain on available-for-sale securities.

A significant portion of the decrease in the net deferred tax liability relating to the Company’s tax depreciation in excess of book depreciation from 2004 to 2005 was the result of the Company’s Equitable Supply segment selling certain non-core assets in a taxable transaction in 2005.  See Note 4.

Income tax expense is summarized as follows:

	Years Ended December 31,
	2005			2004		2003
	(Thousands)
Current:
Federal	$	237,422		$	39,391	$	17,956
State	8,528			2,125		162
Subtotal	245,950			41,516		18,118
Deferred:
Federal	(92,194		)	113,031		62,320
State	(718		)	406		5,597
Subtotal	(92,912		)	113,437		67,917
Total	$	153,038		$	154,953	$	86,035

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Provisions for income taxes differ from amounts computed at the Federal statutory rate of 35% on pretax income from continuing operations before cumulative effect of accounting change.  The reasons for the difference are summarized as follows:

	Years Ended December 31,
	2005			2004			2003
	(Thousands)
Tax at statutory rate	$	144,064		$	158,810		$	88,125
State income taxes	5,076			1,645			3,743
Federal tax credits and incentives	(3,604		)	(707		)	(2,095		)
Book/Tax basis differences	(4,410		)	(3,215		)	(4,583		)
Incentive or deferred compensation	15,300			1,400			—
Other	(3,388		)	(2,980		)	845
Income tax expense	$	153,038		$	154,953		$	86,035
Effective tax rate	37.2		%	34.2		%	34.2		%

During 2005, following a moratorium imposed on the Company by the IRS for claiming any research and development (R&D) tax credits, the Company completed an analysis of its R&D expenditures for the years 2001 through 2005.  This analysis resulted in a research tax credit that generated a tax benefit of $1.0 million in 2005, net of a tax reserve of $0.5 million.

During 2005, the Qualified Production Activities Deduction under Section 199 of the IRC, which provides for a phased-in deduction related to qualifying production activities, was provided for the first time under the American Jobs Creation Act of 2004 (Jobs Act).  The Company recorded an income tax benefit for certain qualifying production activities of approximately $1.9 million in 2005.

During 2005, the Company recorded $15.3 million in tax benefit disallowances under Section 162(m) of the IRC, primarily as the result of impairment of previously recorded deferred tax assets related to the employee deferred compensation programs and the 2003 Executive Performance Incentive Program.

During 2003, the Company requested permission to change its method of accounting for inventory and self-constructed property in accordance with IRC Section 263A to use the simplified service cost method and simplified production method of capitalizing costs.  The request is pending approval.  During 2005, the IRS and the U.S. Treasury Department issued guidance providing for further clarification indicating that certain self-constructed property does not qualify as eligible property for the simplified methods.  In January 2006, the Company requested permission to conform its capitalization method to recent guidance and the request is pending approval.  Consequently, the Company reclassified the deferred tax liability recorded as a result of the 2003 proposed method change to current taxes payable and believes that it is appropriately reserved for any tax exposures related to this item.

The consolidated Federal income tax liability of the Company has been settled with the IRS through 1997.  The IRS has substantially completed its review of the Company’s Federal income tax filings for the 1998 through 2000 years and is in the process of preparing its report to the Joint Committee on Taxation (a joint committee of Congress).  The Joint Committee on Taxation must approve the findings due to a refund claim in excess of $2 million.  The IRS is expected to review the Company’s Federal income tax filings for the 2001 through 2004 tax years beginning in 2006.  The Company also is the subject of various routine state income tax examinations.  The Company believes that it is appropriately reserved for any tax exposures.

An income tax benefit of $18.0 million, $7.8 million and $9.3 million for the years ended December 31, 2005, 2004 and 2003, respectively, triggered by the exercise of nonqualified employee stock options and vesting of restricted share awards is reflected as an addition to common stockholders’ equity.

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The Company has recorded a deferred tax asset of $10.9 million, net of valuation allowances of $9.6 million, related to tax benefits from state net operating loss carryforwards with various expiration dates.

7.Discontinued Operations

In the fourth quarter of 2005, the Company sold its NORESCO domestic business for $82 million before customary purchase price adjustments of $2 million, which resulted in the Company receiving $80 million of proceeds in December 2005 for this sale.  The sales price is also subject to future customary purchase price adjustments per the terms of the agreement.  As a result of this sale, the Company recorded after-tax charges totaling $18.7 million, including $13.7 million which relates to the recording of income taxes associated with the difference between the book and tax basis of the NORESCO assets sold, and $5.0 million of after-tax losses on the sale related to other costs incurred as a result of this sale.  These charges are included in income from discontinued operations.  The Company has recorded a liability of $12.3 million in other current liabilities in its Consolidated Balance Sheet as of December 31, 2005 for its estimated obligations, excluding the tax charge, under this sale agreement.  This amount includes an estimate of amounts due to the purchaser for purchase price adjustments.  Under the stock purchase agreement, the Company also agreed to maintain certain guarantees previously in place and to issue certain additional guarantees related to NORESCO’s future performance on certain contracts.  See Note 20 for further discussion.

Also in December 2005, the Company entered into a purchase and sale agreement, subject to closing conditions, to sell the remaining interest in its investment in IGC/ERI Pan-Am Thermal Generating Limited (Pan Am) for $2.5 million, and as the sale is expected to close in 2006, the Company considers the investment to be held for sale.  The Company recognized a tax benefit of $6.4 million in the fourth quarter of 2005 as a result of the reorganization of the international operations.  The Company recorded the Pan Am investment at its fair value as of December 31, 2005, resulting in an impairment charge of $0.2 million included in income from discontinued operations.

As a result of these transactions, the Company has reclassified its financial statements for all periods presented to reflect the operating results of the NORESCO segment as discontinued operations.

The results of the NORESCO discontinued operations for the fiscal years ended December 31, 2005, 2004 and 2003 are summarized as follows:

	NORESCO DOMESTIC									NORESCO INTERNATIONAL
	Years Ended December 31,									Years Ended December 31,
	2005			2004			2003			2005			2004			2003
	(Thousands)									(Thousands)
Net operating revenues	$	36,575		$	39,336		$	41,014		$	—		$	—		$	—
Operating expenses	24,522			23,569			23,482			—			821			601
Earnings (losses) from nonconsolidated investments, including impairments	43			38			343			14,469			(38,476		)	(8,932		)
Minority interest	(934		)	(976		)	(542		)	—			—			—
Loss on sale of discontinued operations	(7,764		)	—			—			—			—			—
Interest expense	5,901			6,727			3,377			—			—			859
Income (loss) before income taxes	(2,503		)	8,102			13,956			14,469			(39,297		)	(10,392		)
Income tax expense (benefit)	11,808			1,503			(610		)	(1,323		)	(13,762		)	(3,633		)
Net income (loss)	$	(14,311	)	$	6,599		$	14,566		$	15,792		$	(25,535	)	$	(6,759	)

Interest expense of discontinued operations includes interest related to long-term debt and project financing obligations recorded under liabilities held for sale during the years presented as well as an allocation of other interest expense based upon a ratio of the net assets of the discontinued operations to the overall net assets of the Company.

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Total interest expense allocated using this method was $1.5 million, $1.5 million, and $1.2 million for the years ended December 31, 2005, 2004, and 2003, respectively.  Other Company interest expense was not allocated to the international operations, as the Company did not contribute any capital to those operations during 2003, 2004 or 2005.

At December 31, 2005 and 2004, the major components of assets and liabilities of the NORESCO discontinued operations were as follows:

	NORESCO DOMESTIC				NORESCO INTERNATIONAL
	December 31,				December 31,
	2005		2004		2005		2004
	(Thousands)				(Thousands)
Accounts receivable and unbilled revenues	$	—	$	126,305	$	18	$	—
Equity in nonconsolidated investments	—		103		2,500		2,828
Property, plant and equipment, net	—		4,656		—		—
Goodwill	—		51,656		—		—
Other assets	—		19,583		—		6,990
Total assets	$	—	$	202,303	$	2,518	$	9,818
Project financing obligations	$	—	$	104,610	$	—	$	—
Other liabilities	—		32,987		—		15,032
Total liabilities	$	—	$	137,597	$	—	$	15,032

Cash flows generated from the discontinued operations and the proceeds received from the sale of the discontinued NORESCO Domestic operations of $80.0 million are presented on the consolidated statements of cash flows within these Consolidated Financial Statements.

8.Equity in Nonconsolidated Investments

The Company has ownership interests in various nonconsolidated investments that are accounted for under the equity method of accounting.  The following table summarizes the equity in nonconsolidated investments.

		Interest	Ownership as of December		December 31,
Investees	Location	Type	31, 2005		2005		2004
					(Thousands)
Appalachian Natural Gas Trust (ANGT)	USA	Limited	1	%	$	35,555	$	35,616
ESP	USA	Limited	100	%	—		26,009
Total equity in nonconsolidated investments					$	35,555	$	61,625

The Company did not make any additional equity investments in nonconsolidated investments during 2005 or 2004 and has a total cumulative investment in nonconsolidated entities of $35.6 million as of December 31, 2005.  The Company’s ownership share of the earnings for 2005, 2004 and 2003 related to the total investments, excluding Westport, was $0.8 million, $0.9 million and $0.6 million, respectively.

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Equitable Supply’s equity investment in ANGT represents an ownership interest in transactions by which natural gas producing properties located in the Appalachian Basin region of the United States were sold.  In 2002, Equitable Supply transferred one-third of its ownership in ANGT to an affiliated company.  As of both December 31, 2005 and 2004, Equitable Supply’s investment in ANGT totaled $23.7 million, while the Company’s total investment was $35.6 million.

As discussed in Note 5, the Company purchased the 99% limited partnership interest in ESP in January 2005.  The financial position and results of operations of ESP have been consolidated in the Company’s Consolidated Financial Statements as of and for the year ending December 31, 2005.

The following tables summarize the financial information for nonconsolidated investments accounted for under the equity method of accounting:

Summarized Balance Sheets

	As of December 31,
	2005		2004
	(Thousands)
Current assets	$	15,057	$	26,615
Noncurrent assets	206,145		287,784
Total assets	$	221,202	$	314,399
Current liabilities	$	17	$	17
Stockholders’ equity	221,185		314,382
Total liabilities and stockholders’ equity	$	221,202	$	314,399

Summarized Statements of Income

	Year Ended December 31,
	2005		2004		2003
	(Thousands)
Revenues	$	111,037	$	125,323	$	117,174
Costs and expenses applicable to revenues	—		—		—
Net revenues	111,037		125,323		117,174
Operating expenses	39,441		67,825		60,298
Net income	$	71,596	$	57,498	$	56,876

9.Investments

As of December 31, 2005, the investments classified by the Company as available-for-sale consist of approximately $25.2 million of equity securities intended to fund plugging and abandonment and other liabilities for which the Company self-insures.

Any unrealized gains or losses with respect to investments classified as available-for-sale are recognized within the Consolidated Balance Sheets as a component of equity, accumulated other comprehensive loss.

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Information regarding the cost and fair value of the Company’s available-for-sale investments at December 31, 2005 and December 31, 2004 is presented in the tables below.

	December 31, 2005
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Thousands)
Corporate equity securities	$	22,742	$	2,452	$	—	$	25,194
Total investments	$	22,742	$	2,452	$	—	$	25,194

	December 31, 2004
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Thousands)
Investment in Kerr-McGee	$	350,128	$	56,012	$	—		$	406,140
Other corporate equity securities	11,054		1,954		—			13,008
Corporate notes and bonds	7,751		—		(127		)	7,624
Total investments	$	368,933	$	57,966	$	(127	)	$	426,772

In May 2005, the three variable share forward transactions associated with Kerr-McGee shares were terminated as described in Note 3.  The Company concurrently sold 4.3 million Kerr-McGee shares to its three counterparties and received $227.4 million in pre-tax net proceeds at an average price of $75.43 per share.  In addition, the Company unconditionally tendered 1.7 million Kerr-McGee shares at $85.00 per share to Kerr-McGee in connection with Kerr-McGee’s Dutch auction tender offer to purchase its own shares.  Accordingly, as a result of its tender of shares, the Company received approximately $49.0 million in pre-tax proceeds on the sale of approximately 0.6 million shares.  These transactions resulted in pre-tax gains to the Company totaling $34.2 million, net of collar termination costs.

In various transactions during 2005, the Company sold its remaining approximately 2.1 million Kerr-McGee shares for total pre-tax proceeds of $184.1 million.  The sale of these shares resulted in pre-tax gains to the Company totaling $76.1 million.  The Company has no further interest or ownership in any Kerr-McGee shares.

The Company recorded pre-tax dividend income, net of payments to the counterparties for the aforementioned collars, of $1.2 million and $3.1 million for the years ended December 31, 2005 and 2004, respectively.  This dividend income is recorded in other income, net on the Statements of Consolidated Income.

Under the terms of the merger agreement between Westport and Kerr-McGee, the Company received 0.71 shares of Kerr-McGee for each Westport share owned, or 8.2 million shares of Kerr-McGee, in the second quarter of 2004.  Accordingly, the Company recognized a gain of $217.2 million on the exchange of the Westport shares for Kerr-McGee shares in 2004.

Subsequent to the Kerr-McGee/Westport merger, the Company sold 0.8 million Kerr-McGee shares for pre-tax proceeds of $42.9 million in 2004.  The sale resulted in the Company recognizing a gain of $3.0 million in 2004.

In 2004, the Company contributed approximately 0.4 million Kerr-McGee shares to Equitable Resources Foundation, Inc.  This resulted in the Company recording a charitable foundation contribution expense of $18.2 million during 2004, with a corresponding one-time tax benefit of $6.8 million.

The Company utilizes the specific identification method to determine the cost of all investment securities sold.

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10.Regulatory Assets

The following table summarizes the Company’s regulatory assets, net of amortization, as of December 31, 2005 and 2004.  The Company believes that it will continue to be subject to rate regulation that will provide for the recovery of its regulatory assets.

	December 31,
Description	2005			2004
	(Thousands)
Deferred taxes	$	56,208		$	62,117
Delinquency Reduction Opportunity Program	7,449			10,404
Other postemployment benefits (SFAS No. 106)	8,626			7,530
Deferred purchase gas costs	50,472			14,666
Other	172			161
Valuation allowance	(2,400		)	(13,004		)
Total regulatory assets	120,527			81,874
Amounts classified as other current assets	50,472			14,666
Total long-term regulatory assets	$	70,055		$	67,208

The regulatory asset associated with deferred taxes primarily represents deferred income taxes recoverable through future rates once the taxes become current.  The Company is recovering the amortization of this asset through rates.  The Company had established a valuation allowance of $10.4 million as of December 31, 2004, against the deferred tax regulatory asset.  During 2005, the Company evaluated the collectibility of the deferred tax regulatory asset through future rates.  As a result, $8.3 million of the valuation allowance was utilized to record the deferred tax regulatory asset at the amount deemed collectible.  The remaining $2.1 million valuation allowance was included as a component of the Company’s effective tax rate.

The regulatory asset associated with a Delinquency Reduction Opportunity Program was recognized as of December 31, 2001, at Equitable Gas and relates to uncollectible accounts receivable resulting from unusually high natural gas prices and unseasonably cold weather experienced during the winter of 2000-2001.  The regulatory asset was initially established based upon the Company’s ability to recover these costs through a surcharge in rates.  In 2002, the PA PUC issued an order approving a Delinquency Reduction Opportunity Program that gives incentives to low-income customers to make payments that exceed their current bill amount in order to receive additional credits from the Company intended to speed the reduction of the customer’s delinquent balance.  This program is funded through customer contributions and through the existing surcharge in rates.  The Company has established a valuation allowance of $2.4 million and $2.6 million as of December 31, 2005 and 2004, respectively, against the Delinquency Reduction Opportunity Program asset.

The following regulatory assets do not earn a return on investment: deferred taxes, Delinquency Reduction Opportunity Program and other postemployment benefits (SFAS No. 106).  The associated remaining recovery period for the regulatory assets associated with both the Delinquency Reduction Opportunity Program and other postemployment benefits is 10 years.  The associated remaining recovery period for the regulatory assets associated with deferred taxes is variable depending on the life of the book/tax difference generating the deferred item.

11.Short-Term Loans

On August 11, 2005, the Company entered into a $650 million, five-year revolving credit agreement, which replaced the Company’s previous $500 million, three-year revolving credit agreement.  On December 14, 2005, the Company entered into an amendment to the five-year revolving credit agreement.  The amendment increased the lenders’ aggregate commitment from $650 million to an aggregate of $1 billion and extended the stated maturity date from August 9, 2006 to August 10, 2010.  The Company may request a separate one-year extension of the maturity date between each of June 11, 2006, through September 9, 2006, and June 11, 2007,

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through September 9, 2007.  The credit agreement may be used for working capital, capital expenditures, share repurchases and other lawful purposes including support of the Company’s commercial paper program.  Subject to certain terms and conditions, the Company may, on a one-time basis, request that the lender’s commitments be increased to an aggregate amount of up to $1.5 billion.

The Company is not required to maintain compensating bank balances.  The Company’s debt issuer credit ratings, as determined by either Standard & Poor’s or Moody’s on its non-credit-enhanced, senior unsecured long-term debt, determine the level of fees associated with its lines of credit in addition to the interest rate charged by the counterparties on any amounts borrowed against the lines of credit; the lower the Company’s debt credit rating, the higher the level of fees and borrowing rate.  As of December 31, 2005, the Company had not borrowed any amounts against these lines of credit.  Commitment fees averaging one-thirteenth and one-eleventh of one percent in 2005 and 2004, respectively, were paid to maintain credit availability.

Short-term loans were comprised of commercial paper balances of $365.3 million and $295.5 million with weighted average annual interest rates of 4.40% and 2.33% as of December 31, 2005 and 2004, respectively.  The maximum amount of outstanding short-term loans at any time during the year was $631.5 million in 2005 and $397.5 million in 2004.  The average daily balance of short-term loans outstanding over the course of the year was approximately $309.6 million and $185.2 million at weighted average annual interest rates of 3.48% and 1.65% during 2005 and 2004, respectively.

12.Long-Term Debt

	December 31,
	2005		2004
	(Thousands)
5.15% notes, due March 1, 2018	$	200,000	$	200,000
5.15% notes, due November 15, 2012	200,000		200,000
5.00% notes, due October 1, 2015	150,000		—
7.75% debentures, due July 15, 2026	115,000		115,000
Medium-term notes:
8.4% to 9.0% Series A, due 2006 thru 2021	53,434		53,434
7.3% to 7.6% Series B, due 2013 thru 2023	30,000		40,000
6.8% to 7.6% Series C, due 2007 thru 2018	18,000		18,000
	766,434		626,434
Less debt payable within one year	3,000		10,000
Total long-term debt	$	763,434	$	616,434

On September 30, 2005, the Company issued $150 million of notes with a stated interest rate of 5% and a maturity date of October 1, 2015.  The notes were approved by the PA PUC on October 27, 2005.  The effective annual interest rate on the $150 million of notes is 5.06%.

As of December 31, 2005, the Company has the ability to issue $100 million of additional long-term debt under the provisions of shelf registrations filed with the Securities and Exchange Commission.

The indentures and other agreements governing the Company’s indebtedness contain certain restrictive financial and operating covenants including covenants that restrict the Company’s ability to incur indebtedness, incur liens, enter into sale and leaseback transactions, complete acquisitions, merge, sell assets and perform certain other corporate actions.  The covenants do not contain a rating trigger.  Therefore, in the event that the Company’s debt rating changes, this event would not trigger a default under the indentures and other agreements governing the Company’s indebtedness.

Aggregate maturities of long-term debt are $3.0 million in 2006, $10.0 million in 2007, $0 in 2008, $4.3 million in 2009 and $0 in 2010.

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13.Pension and Other Postretirement Benefit Plans

During 2005, the Company settled its pension obligation with the United Steelworkers of America, Local Union 12050 representing 182 employees.  As a result of this settlement, which was accounted for under SFAS No. 88, the Company recognized a settlement expense of $12.1 million during 2005.  During the fourth quarter of 2005, the Company settled its pension obligation with certain non-represented employees.  As a result of this settlement, which was accounted for under SFAS No. 88, the Company recognized a settlement expense of approximately $2.4 million in 2005.

These settlement expenses were primarily the result of accelerated recognition of unrecognized losses.  Under these settlements, the affected employees were provided the option to either roll over the lump-sum value of their pension benefit to the Company’s defined contribution plan or to receive an insured monthly annuity benefit at the time they retire.  Additionally, $14.3 million of these pension settlement expenses are recorded as a selling, general and administrative expense within operating expense of the Equitable Utilities business segment, and $0.2 million is a gathering and compression expense included within operating expense of the Equitable Supply business segment (see Note 2).  As a result of these settlements, the Company’s projected benefit obligation decreased by approximately $13.9 million.

All other non-represented employees are participants in a defined contribution plan.

Effective December 31, 2004, the Company settled the pension obligation of those non-represented employees (cash balance participants) whose benefits were frozen as of December 31, 2003.  As a result of this settlement, the Company recognized a one-time settlement expense of $13.4 million in 2004, which was primarily the result of accelerated recognition of previously deferred unrecognized losses.  The pension settlement expense in 2004 is recorded as an unallocated expense in deriving total operating income for segment reporting purposes (see Note 2).  As a result of this settlement, the Company’s projected benefit obligation decreased by approximately $19.6 million.

The following table sets forth the defined benefit pension and other postretirement benefit plans’ funded status and amounts recognized for those plans in the Company’s Consolidated Balance Sheets:

	Pension Benefits						Other Benefits
	2005			2004			2005			2004
	(Thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	116,255		$	116,947		$	55,673		$	52,769
Service cost	899			1,590			541			483
Interest cost	5,891			6,970			3,168			3,273
Amendments	—			—			1,248			—
Actuarial loss	7,883			5,038			675			6,445
Benefits paid	(7,605		)	(7,821		)	(7,048		)	(7,297		)
Expenses paid	—			(352		)	—			—
Curtailments	1,048			2,434			—			—
Settlements	(42,218		)	(8,551		)	—			—
Benefit obligation at end of year	$	82,153		$	116,255		$	54,257		$	55,673

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	Pension Benefits						Other Benefits
	2005			2004			2005			2004
	(Thousands)
Change in plan assets:
Fair value of plan assets at beginning of year	$	100,917		$	108,311		$	—		$	—
Gain recognized at beginning of year	41			3			—			—
Actual gain on plan assets	3,580			8,917			—			—
Employer contribution	20,364			—			—			—
Benefits paid	(7,605		)	(7,821		)	—			—
Expenses paid	—			(352		)	—			—
Settlements	(42,218		)	(8,141		)	—			—
Fair value of plan assets at end of year	$	75,079		$	100,917		$	—		$	—
Funded status	$	(7,074	)	$	(15,338	)	$	(54,257	)	$	(55,673	)
Unrecognized net actuarial loss	25,721			29,835			39,619			41,242
Unrecognized prior service cost (credit)	1,863			4,316			842			(448		)
Net amount recognized	$	20,510		$	18,813		$	(13,796	)	$	(14,879	)
Amounts recognized in the statement of financial position consist of:
Accrued benefit liability	$	(7,074	)	$	(15,338	)	$	(13,796	)	$	(14,879	)
Intangible asset	1,863			4,316			—			—
Accumulated other comprehensive loss	15,366			19,691			—			—
Deferred tax asset	10,355			10,144			—			—
Net amount recognized	$	20,510		$	18,813		$	(13,796	)	$	(14,879	)

The accrued pension benefit liability of $7.1 million and $15.3 million as of December 31, 2005 and 2004, respectively, is included in other credits on the Consolidated Balance Sheets.  The accrued benefit liability for other postretirement benefits of $13.8 million and $14.9 million as of December 31, 2005 and 2004, respectively, is also included in other credits.  A total of $4.3 million was included in other comprehensive loss in 2005 as a result of the change in the additional minimum pension liability from December 31, 2004 to December 31, 2005.  The accumulated benefit obligation for all defined benefit pension plans was $82.2 million and $116.3 million at December 31, 2005 and 2004, respectively.

The Company uses a December 31 measurement date for its defined benefit pension and other postretirement plans.

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The Company’s costs related to its defined benefit pension and other postretirement benefit plans were as follows:

	Pension Benefits									Other Benefits
	2005			2004			2003			2005			2004			2003
	(Thousands)
Components of net periodic benefit cost:
Service cost	$	899		$	1,590		$	2,684		$	541		$	483		$	313
Interest cost	5,891			6,970			7,553			3,168			3,273			3,467
Expected return on plan assets	(8,032		)	(9,828		)	(8,660		)	—			—			—
Amortization of prior service cost	766			940			1,286			(42		)	(42		)	(42		)
Amortization of initial net obligation	—			—			—			—			—			—
Recognized net actuarial loss	867			745			21			2,299			2,000			1,828
Special termination benefits	88			—			—			—			—			—
Settlement loss (a)	15,625			13,733			2,206			—			—			—
Curtailment loss	2,648			2,434			2,181			—			—			—
Net periodic benefit cost	$	18,752		$	16,584		$	7,271		$	5,966		$	5,714		$	5,566

(a)The 2005 settlement loss includes $10.4 million of loss recognition for the settlement of the Steelworkers pension benefit obligation and $1.3 million of loss associated with the non-represented employees portion of the pension benefit obligation which was settled during the fourth quarter of 2005.  The 2004 settlement loss includes $11.0 million of loss recognition associated with the settlement of the cash balance participants pension benefit obligation at December 31, 2004, for those non-represented employees whose benefits under the pension plan were frozen in 2003.

The following weighted average assumptions were used to determine the benefit obligations and net periodic benefit cost for the Company’s defined benefit pension and other postretirement benefit plans:

	Pension Benefits				Other Benefits
	2005		2004		2005		2004
Discount rate	5.75	%	6.00	%	5.75	%	6.00	%
Expected return on plan assets	8.25	%	8.25	%	N/A		N/A
Rate of compensation increase	N/A		N/A		N/A		N/A

The expected rate of return is established at the beginning of the fiscal year that it relates to based upon information available to the Company at that time, including the plans’ investment mix and the forecasted rates of return on these types of securities.  The Company considered the historical rates of return earned on plan assets, an expected return percentage by asset class based upon a survey of investment managers and the Company’s actual and targeted investment mix.  Any differences between actual experience and assumed experience are deferred as an unrecognized actuarial gain or loss.  The unrecognized actuarial gains or losses are amortized into the Company’s net periodic benefit cost in accordance with SFAS No. 87.  The expected rate of return determined as of January 1, 2006 totaled 8.25%.  This assumption will be used to derive the Company’s 2006 net periodic benefit cost.  The rate of compensation increase is no longer applicable in determining future benefit obligations as a result of the conversion of certain non-represented employees to a defined contribution plan in 2003 as previously discussed.

For measurement purposes, the annual rate of increase in the per capita cost of covered health care benefits in 2006 is 8.0% for both the Pre-65 and Post-65 medical charges.  The rates were assumed to decrease gradually to ultimate rates of 4.5% in 2009.

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Assumed health care cost trend rates have an effect on the amounts reported for the health care plans.  A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	One-Percentage-Point Increase						One-Percentage-Point Decrease
	(Thousands)						(Thousands)
	2005		2004		2003		2005			2004			2003
Increase (decrease) to total of service and interest cost components	$	91	$	108	$	87	$	(90	)	$	(104	)	$	(81	)
Increase (decrease) to postretirement benefit obligation	$	2,030	$	1,751	$	1,407	$	(1,897	)	$	(1,659	)	$	(1,316	)

The Company’s pension asset allocation at December 31, 2005 and 2004 and target allocation for 2006 by asset category are as follows:

	Target	Percentage of Plan Assets at December 31,
Asset Category	Allocation 2006	2005		2004
Domestic broadly diversified equity securities	50% - 70%	54	%	56	%
Fixed income securities	30% - 45%	38	%	37	%
International broadly diversified equity securities	0% - 10%	7	%	6	%
Other	0% - 15%	1	%	1	%
		100	%	100	%

The investment activities of the Company’s pension plan are supervised and monitored by the Company’s Benefits Investment Committee.  The Benefits Investment Committee has developed an investment strategy that focuses on asset allocation, diversification and quality guidelines.  The investment goals of the Benefits Investment Committee are to minimize high levels of risk at the total pension investment fund level.  The Benefits Investment Committee monitors the actual asset allocation on a quarterly basis and adjustments are made, as needed, to rebalance the assets within the prescribed target ranges.  Comparative market and peer group benchmarks are utilized to ensure that each of the firm’s investment managers is performing satisfactorily.

The Company made cash contributions of approximately $20.4 million to its pension plan during 2005, of which $12.6 million was to fund the cash balance participants’ portion of the pension plan and $7.8 million was to fund the Steelworkers portion of the pension plan.  The Company expects to make a cash contribution of approximately $2.3 million to its pension plan during 2006 to fund the non-represented employees’ portion of the pension plan which was settled during the fourth quarter of 2005.

The Company was not required to, and consequently did not make any contribution to its pension plans during the year ended December 31, 2004.  The Company made cash contributions totaling $51.8 million to its pension plan during the year ended December 31, 2003, primarily due to the Company’s benefit obligation being significantly under funded.

The following benefit payments, which reflect expected future service, are expected to be paid during each of the next five years and the five years thereafter: $10.2 million in 2006; $7.4 million in 2007; $7.2 million in 2008; $7.2 million in 2009; $6.6 million in 2010; and $33.2 million in the five years thereafter.

On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the MPDIM Act) was signed into law.  The MPDIM Act expanded Medicare to include coverage for prescription drugs.  In accordance with FSP FAS 106-2, all measures of the accumulated postretirement benefit obligation and net periodic postretirement benefit cost in the financial statements and accompanying notes reflect the impact of the MPDIM Act on the Company’s postretirement benefit plan for the entire 2005 fiscal year.

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The Company sponsors two Medicare supplement retiree medical programs which are impacted by the MPDIM Act.  Initially, the Company planned to take advantage of the federal subsidy provided to employers that provide a prescription drug benefit that is at least actuarially equivalent to the program provided through Medicare Part D.  However, in the fourth quarter of 2005, it was determined that the Company would not take advantage of the federal subsidy and, as a better alternative, plan design changes were made that benefited both the Company and retiree plan participants.  As a result of the plan design changes, the accumulated postretirement benefit obligation and the net periodic postretirement benefit cost were reduced by $3.4 million and $0.5 million, respectively.

Expense recognized by the Company related to its 401(k) employee savings plans totaled $5.1 million in 2005, $4.5 million in 2004 and $3.1 million in 2003.

14.Common Stock and Earnings Per Share

At December 31, 2005, shares of Equitable’s authorized and unissued common stock were reserved as follows:

	(Thousands)
Possible future acquisitions	13,194
Stock compensation plans	16,339
Total	29,533

Earnings Per Share

The computation of basic and diluted earnings per common share is shown in the table below:

	Years Ended December 31,
	2005		2004			2003
	(Thousands, except per share amounts)
Basic earnings per common share:
Income from continuing operations before cumulative effect of accounting change	$	258,574	$	298,790		$	165,750
Income (loss) from discontinued operations, net of tax	1,481		(18,936		)	7,807
Cumulative effect of accounting change, net of tax	—		—			(3,556		)
Net income applicable to common stock	$	260,055	$	279,854		$	170,001
Average common shares outstanding	121,099		123,364			124,100
Basic earnings per common share	$	2.15	$	2.27		$	1.37
Diluted earnings per common share:
Income from continuing operations before cumulative effect of accounting change	$	258,574	$	298,790		$	165,750
Income (loss) from discontinued operations, net of tax	1,481		(18,936		)	7,807
Cumulative effect of accounting change, net of tax	—		—			(3,556		)
Net income applicable to common stock	$	260,055	$	279,854		$	170,001
Average common shares outstanding	121,099		123,364			124,100
Potentially dilutive securities:
Stock options and awards (a)	2,616		2,838			2,616
Total	123,715		126,202			126,716
Diluted earnings per common share	$	2.10	$	2.22		$	1.34

(a)There were no antidilutive options for 2005 or 2004.  Options to purchase 22,674 shares of common stock were not included in the computation of diluted earnings per common share for 2003 because the options’ exercise prices were greater than the average market prices of the common shares.

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15.Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows:

	2005			2004
	(Thousands)
Net unrealized loss from hedging transactions	$	(741,804	)	$	(198,185	)
Unrealized gain on available-for-sale securities	1,570			37,529
Minimum pension liability adjustment	(15,366		)	(19,691		)
Accumulated other comprehensive loss	$	(755,600	)	$	(180,347	)

16.Stock-Based Compensation Plans

Long-Term Incentive Plans

The Company’s 1994 and 1999 Long-Term Incentive Plans (the Plans) provide 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 restricted stock, stock options, 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 Plans and the value of stock appreciation units are restricted and subject to forfeiture should an optionee terminate employment prior to specified vesting dates.  In no case may the number of shares granted under the Plans exceed 6,902,000 and 22,000,000 shares, respectively.  Options granted under the Plans expire 6 to 10 years from the date of grant and some contain vesting provisions that are based upon the Company’s performance.  As of December 31, 2005, no options were outstanding or exercisable under the 1994 Long-Term Incentive Plan.  No new stock options have been awarded since 2003.  Option grants reflected below for 2004 and 2005 comprise options granted for reload rights associated with previously awarded options.

Restricted Stock Awards

In 2005, 2004 and 2003, the Company granted 138,400, 291,100 and 141,020 restricted stock awards, respectively, to key employees from the 1999 Long-Term Incentive Plan.  The weighted average fair value per share of these restricted stock grants is $33.07, $21.88 and $17.80, respectively, for 2005, 2004 and 2003.  The shares granted under these plans will be fully vested at the end of the three-year period commencing the date of grant.  Compensation expense recorded by the Company related to restricted stock awards was $3.4 million in 2005, $3.8 million in 2004 and $2.6 million in 2003.  A total of 520,435 restricted stock awards were outstanding as of December 31, 2005.

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A summary of restricted stock activity as of December 31, 2005, and changes during the year then ended, is presented below:

Restricted Stock	Non- Vested Shares		Weighted Average Fair Value		Weighted Average Remaining Contractual Term (months)	Aggregate Fair Value
Outstanding at January 1, 2005	594,180		$	19.35		$	11,494,897
Granted	138,400		$	33.07		$	4,576,848
Vested	(112,660	)	$	16.02		$	(1,804,472	)
Forfeited	(99,485	)	$	24.02		$	(2,389,378	)
Outstanding at December 31, 2005	520,435		$	22.82	16.6	$	11,877,895

Executive Performance Incentive Programs

In the first quarter of 2005, the Company paid out the 552,000 performance-based stock units that vested December 31, 2004, under the Company’s 2002 Executive Performance Incentive Program.  This payment totaled $16.7 million.

The vesting of performance-based stock units granted under the 2003 Executive Performance Incentive Program (2003 Program) occurred on December 30, 2005, after the ordinary close of the performance period and resulted in approximately 1.3 million units (167% of the award) being distributed in cash on that date.  This payment totaled $51.0 million.  The 2003 Program expense for the period ended December 31, 2005, was $21.3 million and is classified as selling, general and administrative expense.

In February 2005, the Compensation Committee of the Board of Directors adopted the 2005 Executive Performance Incentive Program (2005 Program) under the 1999 Long-Term Incentive Plan.  The 2005 Program was established to provide additional incentive benefits to retain executive officers and certain other employees of the Company to further align the interests of the persons primarily responsible for the success of the Company with the interests of the shareholders.  A total of 1,066,800 stock units were granted to thirty-seven participants.  No additional units may be granted.  The vesting of these stock units will occur on December 31, 2008, contingent upon a combination of the level of total shareholder return relative to the 29 peer companies identified below and the Company’s average absolute return on total capital during the four-year performance period.  As a result, zero to 2,667,000 units (250% of the units available for grant) may be distributed in cash or stock.  The Company anticipates, based on current estimates, that a certain level of performance will be met and has expensed a ratable estimate of the units accordingly.  The 2005 Program expense for the period ended December 31, 2005, was $22.5 million and is classified as selling, general and administrative expense.

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The current peer companies for the 2005 Program are as follows:

AGL Resources Inc.	MDU Resources Group Inc.	Questar Corp.
ATMOS Energy Corp.	National Fuel Gas Co.	Sempra Energy
Cascade Natural Gas Corp.	New Jersey Resources Corp.	Southern Union Co.
CMS Energy Corp.	NICOR, Inc.	Southwest Gas Corp.
Dynegy Inc.	NISOURCE Inc.	Southwestern Energy Co
El Paso Corp.	Northwest Natural Gas Co.	UGI Corp.
Energen Corp.	OGE Energy Corp.	Westar Energy Inc.
Keyspan Corp.	ONEOK Inc	WGL Holdings, Inc.
Kinder Morgan Inc.	Peoples Energy Corp.	The Williams Companies, Inc.
Laclede Group, Inc.	Piedmont Natural Gas Co., Inc.

Stock Options

Pro forma information regarding net income and earnings per share for options granted is required by SFAS No. 123 and has been determined as if the Company had accounted for its employee stock options under the fair value method of SFAS No. 123.  See Note 1.  The fair value for these option grants was estimated at the dates of grant using a Black-Scholes option-pricing model with the following assumptions for 2005, 2004 and 2003, respectively.

	Years Ended December 31,
	2005			2004			2003
Risk-free interest rate (range)	3.74% to 4.34		%	1.95% to 4.34		%	2.35% to 3.72		%
Dividend yield	2.44		%	2.88		%	2.47		%
Volatility factor	.274			.263			.251
Weighted average expected life of options	7 years			7 years			7 years
Options granted	68,898			126,858			1,081,830
Weighted average fair market value of options granted during the year	$	7.65		$	4.94		$	4.84

	Years Ended December 31,
	2005				2004				2003
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Options outstanding January 1	7,610,098		$	14.56	9,776,016		$	14.23	12,332,008		$	13.28
Granted	68,898		$	31.03	126,858		$	23.36	1,081,830		$	18.07
Forfeited	(72,574	)	$	18.38	(164,468	)	$	17.33	(453,146	)	$	17.06
Exercised	(2,496,001	)	$	11.30	(2,128,308	)	$	13.35	(3,184,676	)	$	11.45
Options outstanding December 31	5,110,421		$	16.32	7,610,098		$	14.56	9,776,016		$	14.23
Options exercisable December 31	4,874,970		$	16.24	6,218,074		$	13.89	6,251,294		$	12.61

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Options outstanding at December 31, 2005 include 4,874,970 exercisable at that date and are summarized in the following table.

Options Outstanding									Options Exercisable
Range of Exercise Prices					Number Outstanding as of December 31, 2005	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Exercisable as of December 31, 2005	Weighted Average Exercise Price
$	6.59	to	$	9.89	37,334	3.3	$	7.58	37,334	$	7.58
$	9.90	to	$	13.19	422,234	4.2	$	10.06	422,234	$	10.06
$	13.20	to	$	16.48	1,887,177	5.0	$	15.67	1,887,177	$	15.67
$	16.49	to	$	19.78	2,667,366	6.1	$	17.50	2,431,915	$	17.46
$	19.79	to	$	23.07	9,350	3.4	$	20.58	9,350	$	20.58
$	23.08	to	$	26.37	22,568	2.3	$	23.45	22,568	$	23.45
$	26.38	to	$	29.67	22,424	4.4	$	28.08	22,424	$	28.08
$	29.68	to	$	32.96	41,968	1.4	$	30.20	41,968	$	30.20

Nonemployee Directors’ Stock Incentive Plans

The Company’s 1999 Nonemployee Directors’ Stock Incentive Plans provides for the granting of up to 1,200,000 shares of common stock in the form of stock option grants and restricted stock awards to nonemployee directors of the Company.  The exercise price for each share is equal to market price of the common stock on the date of grant.  Each option is subject to time-based vesting provisions and expires 5 to 10 years after date of grant.  At December 31, 2005, 160,904 options were outstanding at prices ranging from $6.59 to $29.67 per share, and 537,200 options had been exercised under this plan since the plan inception.

17.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 fair value of the available-for-sale securities is estimated based on quoted market prices for those investments.

The estimated fair value of long-term debt described in Note 12 at December 31, 2005 and 2004 was $816.8 million and $687.2 million, respectively.  The fair value was estimated based on discounted values using a current discount rate reflective of the remaining maturity.

The estimated fair value of liabilities for derivative instruments described in Note 3, excluding trading activities which are marked-to-market, was a $36.0 million asset and a $1.2 billion liability at December 31, 2005, and a $26.8 million asset and a $350.4 million liability at December 31, 2004.

18.Concentrations of Credit Risk

Revenues and related accounts receivable from the Equitable Supply segment’s operations are generated primarily from the sale of produced natural gas to certain marketers, Equitable Energy, LLC (an affiliate), other Appalachian Basin purchasers and utility and industrial customers located mainly in the Appalachian area; the sale of produced natural gas liquids to a gas processor in Kentucky; and gathering of natural gas in Kentucky, Virginia, Pennsylvania and West Virginia.

Equitable Utilities’ distribution operating revenues and related accounts receivable are generated from state-regulated utility natural gas sales and transportation to approximately 274,400 residential, commercial and industrial customers located in southwestern Pennsylvania, northern West Virginia and eastern Kentucky.  The Pipeline operations include FERC-regulated interstate pipeline transportation and storage service for the affiliated utility,

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Equitable Gas Company (Equitable Gas), as well as other utility and end-user customers located in the northeastern United States.  The unregulated marketing operations provide commodity procurement and delivery, physical natural gas management operations and control, and customer support services to energy consumers including large industrial, utility, commercial, institutional and certain marketers primarily in the Appalachian and mid-Atlantic regions.

Under previous state regulations, Equitable Gas was required to provide continuous natural gas service to residential customers during the winter heating season.  The Responsible Utility Customer Protection Act (Act 201), which became effective in Pennsylvania on December 14, 2004, established new procedures for utilities regarding collection activities with respect to deposits, payment plans and terminations for residential customers and is intended to help utility companies collect amounts due from customers.  As a result of Act 201, the Company is permitted to send winter termination notices to customers whose household income exceeds 250% of the federal poverty level and complete customer terminations without approval from the PA PUC.

Approximately 69% and 67% of the Company’s accounts receivable balance as of December 31, 2005 and 2004, respectively, represent amounts due from marketers.  The Company manages the credit risk of sales to marketers by limiting its dealings to those marketers who meet the Company’s criteria for credit and liquidity strength and by proactively monitoring these accounts.  The Company may require letters of credit, guarantees, performance bonds or other credit enhancements from a marketer in order for that marketer to meet the Company’s credit criteria.  As a result, the Company did not experience any significant defaults on sales of natural gas to marketers during the years ended December 31, 2005 and 2004.

The Company is exposed to credit loss in the event of nonperformance by counterparties to derivative contracts.  This credit exposure is limited to derivative contracts with a positive fair value.  NYMEX-traded futures contracts have minimal credit risk because futures exchanges are the counterparties.  The Company manages the credit risk of the other derivative contracts by limiting dealings to those counterparties who meet the Company’s criteria for credit and liquidity strength.

The Company is not aware of any significant credit risks that have not been recognized in provisions for doubtful accounts.

19.Commitments and Contingencies

The Company has annual commitments of approximately $31.4 million for demand charges under existing long-term contracts with pipeline suppliers for periods extending up to ten years as of December 31, 2005, which relate to natural gas distribution and production operations.  However, the Company believes that approximately $20.0 million of these costs are recoverable in customer rates.

In the ordinary course of business, various legal claims and proceedings are pending or threatened against the Company.  While the amounts claimed may be substantial, the Company is unable to predict with certainty the ultimate outcome of such claims and proceedings.  The Company has established reserves for pending litigation, which it believes are adequate, and after consultation with counsel and giving appropriate consideration to available insurance, the Company believes that the ultimate outcome of any matter currently pending against the Company will not materially affect the financial position of the Company.

The Company is subject to various federal, state and local environmental and environmentally related 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 ongoing evaluation of its operations to identify potential environmental exposures and to assure compliance with regulatory policies and procedures.  The estimated costs associated with identified situations that require remedial action are accrued.  However, certain costs are deferred as regulatory assets when recoverable through regulated rates.  Ongoing 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

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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.  The Company has identified situations that require remedial action for which approximately $2.9 million is included in other credits in the Consolidated Balance Sheet as of December 31, 2005.

Operating lease rentals for office locations and warehouse buildings, as well as a limited amount of equipment, amounted to approximately $4.9 million in 2005, $4.2 million in 2004 and $4.1 million in 2003.  Future lease payments under non-cancelable operating leases as of December 31, 2005 totaled $62.8 million (2006 - $7.3 million, 2007 - $6.5 million, 2008 - $5.8 million, 2009 - $4.3 million, 2010 - $3.6 million and thereafter - $35.3 million).

20.Guarantees

NORESCO Guarantees

In connection with its sale of the NORESCO domestic operations in December 2005, the Company agreed to maintain guarantees of certain of NORESCO’s obligations previously issued to the purchasers of NORESCO’s receivables.  Under previously executed transactions to sell certain contractual receivables, NORESCO agreed to indemnify the purchasers of the receivables for future shortfalls that may arise from warranty and maintenance issues on the underlying customer contracts.  Additionally, the Company agreed to issue additional guarantee obligations (including performance and payment bonds) after closing of the NORESCO sale in connection with certain receivable sales and customer contracts that were complete or nearly complete prior to the closing of the sale.  The undiscounted maximum aggregate payments that may be due under the guarantees described above is approximately $248 million, and extends at a decreasing amount for approximately 20 years.

In addition, the Company agreed to maintain in place certain outstanding payment and performance bonds, letters of credit and other guarantee obligations supporting NORESCO’s obligations under certain customer contracts, existing leases and other items with an undiscounted maximum exposure to the Company of approximately $264 million, of which approximately $149 million relates to work already completed under the associated contracts.  In addition, approximately $200 million of these guarantee obligations will end or be terminated not later than December 30, 2010.

In exchange for the Company’s agreement to maintain these guarantee obligations, the purchaser of the NORESCO business and NORESCO agreed, among other things, that NORESCO would fully perform its obligations under each underlying agreement and agreed to reimburse the Company for any loss under the guarantee obligations, provided that the purchaser’s reimbursement obligation will not exceed $6 million in the aggregate and will expire on November 18, 2014.

The Company previously did not disclose the guarantee obligations described above because they were specifically exempt from disclosure under the provisions of FIN 45.  In addition, the Company has determined that the likelihood it will be required to perform on these arrangements is remote and has not recorded any liabilities in its Consolidated Balance Sheet related to these guarantees.

Other Guarantees

In November 1995, Equitable, through a subsidiary, guaranteed a tax indemnification to the limited partners of ABP for any potential tax losses resulting from a disallowance of the nonconventional fuels tax credits, if certain representations and warranties of the Company were not true.  The Company guaranteed the tax indemnification until the tax statute of limitations closes.  The Company does not have any recourse provisions with third parties or any collateral held by third parties associated with this guarantee that could be liquidated to recover amounts paid, if any, under the guarantee.  As of December 31, 2005, the maximum potential amount of future payments the Company could be required to make is estimated to be approximately $46.0 million.  The Company has not recorded a liability for this guarantee, as the guarantee was issued prior to the effective date of FIN 45, and has not been

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modified subsequent to issuance.  Additionally, based on the status of the Company’s IRS examinations, the Company has determined that any potential loss from this guarantee is remote.

In June 2000, Equitable sold certain properties and, through a subsidiary, guaranteed a tax indemnification to the buyer for any potential tax losses resulting from a disallowance of the nonconventional fuels tax credits, if certain representations and warranties of the Company were not true.  The Company guaranteed the tax indemnification until the tax statute of limitations closes.  As of December 31, 2005, the maximum potential amount of future payments the Company could be required to make is estimated to be approximately $23.0 million.  The Company has not recorded a liability for this guarantee, as the guarantee was issued prior to the effective date of FIN 45 and has not been modified subsequent to issuance.  Additionally, based on the status of the Company’s IRS examinations, the Company has determined that any potential loss from this guarantee is remote.

In December 2000, the Company entered into a transaction with ANGT by which natural gas producing properties located in the Appalachian Basin region of the United States were sold.  ANGT manages the assets and produces, markets, and sells the related natural gas from the properties.  Appalachian NPI, LLC (ANPI) contributed cash to ANGT.  The assets of ANPI, including its interest in ANGT, collateralize ANPI’s debt.  The Company provided ANPI with a liquidity reserve guarantee secured by the fair market value of the assets purchased by ANGT.  This guarantee is subject to certain restrictions that limit the amount of the guarantee to the calculated present value of the project’s future cash flows from the preceding year-end until the termination date of the agreement.  The agreement also defines events of default, use of proceeds and demand procedures.  The Company has received a market-based fee for providing the guarantee.  As of December 31, 2005, the maximum potential amount of future payments the Company could be required to make under the liquidity reserve guarantee is estimated to be approximately $43 million.  The Company has not recorded a liability for this guarantee, as the guarantee was issued prior to the effective date of FIN 45 and has not been modified subsequent to issuance.

21.Office Consolidation / Impairment Charges

In May 2005, the Company completed the relocation of its corporate headquarters and other operations to a newly constructed office building located at the North Shore in Pittsburgh.  The relocation resulted in the early termination of several operating leases and the early retirement of assets and leasehold improvements at several locations for total impairment charges of $7.8 million.  These charges included a loss of $5.3 million, recorded in accordance with SFAS No. 146, on the early termination of operating leases for facilities deemed to have no economic benefit to the Company and a loss of $2.5 million, recorded in accordance with SFAS No. 144, on the impairment of assets.

22.Prepaid Forward Contract

In 2000, the Company entered into two prepaid natural gas sales contracts pursuant to which the Company was required to sell and deliver natural gas during the term of the contracts.  The first contract was for five years; the second contract was for three years and was completed at the end of 2003.  These contracts were recorded as prepaid forward sales and were recognized in income as deliveries occurred.

In June 2004, the Company amended the remaining prepaid natural gas contract, which was viewed as debt by the rating agencies. The amendment required the Company to repay the net present value of the portion of the prepayment related to the undelivered quantities of natural gas in the original contract.  The Company repaid the counterparty $36.8 million, removed the prepaid forward sale from the balance sheet and recorded a loss of $5.5 million in other income, net in the Statement of Consolidated Income for the year ended December 31, 2004, reflecting the difference between the net present value of the underlying quantities and the remaining unamortized balance recorded as deferred revenue.

83

23.Other Items

In 2004, the Company settled a disputed property insurance coverage claim involving Kentucky West Virginia Gas Company, LLC, which is a part of the Equitable Supply operating segment.  As a result of the settlement, the Company recognized income of approximately $6.1 million in 2004, which is included in other income, net, in the Statement of Consolidated Income for the year ended December 31, 2004.

In 2004, the Company renegotiated a processing agreement with one of its customers whereby the liquid processing agreement between the two parties was changed from a make-whole arrangement to a processing fee arrangement.  As a result of this change, the Company recognized a net gain of $2.7 million, which is included in net operating revenues in the Statement of Consolidated Income for the year ended December 31, 2004.

24.Interim Financial Information (Unaudited)

The following quarterly summary of operating results reflects variations due primarily to the seasonal nature of the Company’s utility business and volatility of natural gas and oil commodity prices.  The quarterly results have been reclassified to reflect the Company’s NORESCO business segment as discontinued operations for each period presented.

	March 31		June 30		September 30		December 31 (a)
	(Thousands, except per share amounts)
2005
Operating revenues	$	401,276	$	230,194	$	229,372	$	392,882
Net operating revenues	212,545		154,277		163,416		212,317
Operating income	127,196		53,459		54,689		108,468
Income from continuing operations before cumulative effect of accounting change	74,791		57,953		45,811		80,019
Income (loss) from discontinued operations, net of tax	1,615		6,366		680		(7,180		)
Net income	76,406		64,319		46,491		72,839
Earnings per share of common stock:
Income from continuing operations before cumulative effect of accounting change
Basic	$	0.62	$	0.48	$	0.37	$	0.67
Diluted	$	0.60	$	0.47	$	0.37	$	0.65
Income (loss) from discontinued operations, net of tax
Basic	$	0.01	$	0.05	$	0.01	$	(0.06	)
Diluted	$	0.01	$	0.05	$	0.01	$	(0.06	)
Net income
Basic	$	0.63	$	0.53	$	0.38	$	0.61
Diluted	$	0.61	$	0.52	$	0.38	$	0.59

84

	March 31		June 30			September 30		December 31
	(Thousands, except per share amounts)
2004
Operating revenues	$	366,501	$	204,940		$	168,481	$	305,261
Net operating revenues	193,010		137,320			133,647		169,156
Operating income	115,741		43,690			61,052		69,222
Income from continuing operations before cumulative effect of accounting change	68,647		155,225			34,667		40,251
Income (loss) from discontinued operations, net of tax	1,423		(24,398		)	1,016		3,023
Net income	70,070		130,827			35,683		43,274
Earnings per share of common stock:
Income from continuing operations before cumulative effect of accounting change
Basic	$	0.55	$	1.25		$	0.28	$	0.33
Diluted	$	0.54	$	1.22		$	0.27	$	0.33
Income (loss) from discontinued operations, net of tax
Basic	$	0.01	$	(0.20	)	$	0.01	$	0.02
Diluted	$	0.01	$	(0.19	)	$	0.01	$	0.02
Net income
Basic	$	0.56	$	1.05		$	0.29	$	0.35
Diluted	$	0.55	$	1.03		$	0.28	$	0.35

(a)Amounts for the quarter ended December 31, 2005, include an adjustment of $10.6 million to operating revenues in the Company’s Equitable Supply segment principally due to the Company’s conclusion that the well-head sales price allocated to a third party’s working interest gas in previous periods may have been lower than the Company was obligated to pay.

85

25.Natural Gas Producing Activities (Unaudited)

The supplementary information summarized below presents the results of natural gas and oil activities for the Equitable Supply segment in accordance with SFAS No. 69.

Production Costs

The following table presents the costs incurred relating to natural gas and oil production activities:

	2005		2004		2003
	(Thousands)
At December 31:
Capitalized costs	$	1,551,677	$	1,396,899	$	1,303,655
Accumulated depreciation and depletion	518,426		488,742		450,761
Net capitalized costs	$	1,033,251	$	908,157	$	852,894
Costs incurred:
Property acquisition:
Proved properties	$	57,500	$	—	$	—
Unproved properties	—		—		—
Land and leasehold maintenance	768		846		824
Development (a)	132,317		91,489		125,962

(a)Amounts include $72.0 million, $55.9 million and $82.7 million of costs incurred during 2005, 2004 and 2003, respectively, to develop the Company’s proved undeveloped reserves.  The Company estimates that its future total development costs will be comprised of a similar percentage of costs incurred to develop the Company’s proved undeveloped reserves.

Results of Operations for Producing Activities

The following table presents the results of operations related to natural gas and oil production:

	2005		2004		2003
	(Thousands)
Revenues:
Affiliated	$	11,856	$	10,599	$	11,457
Nonaffiliated	378,434		305,387		251,150
Production costs	61,483		43,274		35,687
Depreciation and depletion	49,281		41,275		35,974
Income tax expense	95,933		85,701		71,414
Results of operations from producing activities (excluding corporate overhead)	$	183,593	$	145,736	$	119,532

86

Reserve Information

The information presented below represents estimates of proved natural gas and oil reserves prepared by Company engineers, which was reviewed by the independent consulting firm of Ryder Scott Company L.P.  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.  All of the Company’s proved reserves are in the United States.

	2005		2004		2003
	(Millions of Cubic Feet)
Natural Gas
Proved developed and undeveloped reserves:
Beginning of year	2,102,539		2,064,126		2,131,821
Revision of previous estimates	288,590		56,392		(41,053	)
Purchase of natural gas in place	19,159		—		—
Sale of natural gas in place	(57,700	)	—		(7,146	)
Extensions, discoveries and other additions (a)	84,717		54,247		49,926
Production	(78,105	)	(72,226	)	(69,422	)
End of year	2,359,200		2,102,539		2,064,126
Proved developed reserves:
Beginning of year	1,625,295		1,580,474		1,573,278
End of year	1,666,990		1,625,295		1,580,474

	2005		2004		2003
	(Thousands of Bbls)
Oil
Proved developed and undeveloped reserves:
Beginning of year	1,019		550		1,432
Revision of previous estimates	112		552		170
Purchase of oil in place	38		—		—
Sale of oil in place	(53	)	—		(969	)
Production	(108	)	(83	)	(83	)
End of year	1,008		1,019		550
Proved developed reserves:
Beginning of year	1,019		550		1,432
End of year	1,008		1,019		550

(a)Includes 29,995 MMcf, 17,246 MMcf and 31,755 MMcf of proved developed reserve extensions, discoveries and other additions during 2005, 2004 and 2003, respectively, which were not previously classified as proved undeveloped.  The remaining balance represents additional proved undeveloped reserves.

87

Standard Measure of Discounted Future Cash Flow

Management cautions that the standard measure of discounted future cash flows should not be viewed as an indication of the fair market value of natural 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 a 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:

	2005			2004			2003
	(Thousands)
Future cash inflows	$	28,122,308		$	17,312,818		$	10,462,523
Future production costs	(3,939,210		)	(2,465,681		)	(1,938,827		)
Future development costs	(791,539		)	(409,141		)	(341,116		)
Future net cash flow before income taxes	23,391,559			14,437,996			8,182,580
10% annual discount for estimated timing of cash flows	(15,789,506		)	(9,736,734		)	(5,550,907		)
Discounted future net cash flows before income taxes	7,602,053			4,701,262			2,631,673
Future income tax expenses, discounted at 10% annually	(2,609,025		)	(1,740,878		)	(921,086		)
Standardized measure of discounted future net cash flows	$	4,993,028		$	2,960,384		$	1,710,587

Summary of changes in the standardized measure of discounted future net cash flows:

	2005			2004			2003
	(Thousands)
Sales and transfers of natural gas and oil produced – net	$	(329,575	)	$	(273,558	)	$	(227,745	)
Net changes in prices, production and development costs	1,565,744			1,746,284			413,043
Extensions, discoveries and improved recovery, less related costs	272,419			121,051			63,645
Development costs incurred	76,694			68,688			70,112
Purchase of minerals in place – net	62,341			—			—
Sale of minerals in place – net	(129,466		)	—			(12,659		)
Revisions of previous quantity estimates	911,986			131,142			(111,228		)
Accretion of discount	457,225			263,166			221,873
Net change in income taxes	(868,147		)	(819,792		)	(140,101		)
Other	13,423			12,816			(16,753		)
Net increase	2,032,644			1,249,797			260,187
Beginning of year	2,960,384			1,710,587			1,450,400
End of year	$	4,993,028		$	2,960,384		$	1,710,587

88

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not Applicable.

Item 9A.Controls and Procedures

Disclosure Controls and Procedures

The Principal Executive Officer and Principal Financial Officers conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report.  Based on that evaluation, the Principal Executive Officer and Principal Financial Officers concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.  There were no significant changes in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fourth quarter of 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

The management of Equitable is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)).  Equitable’s internal control system is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  All internal control systems, no matter how well designed, have inherent limitations.  Accordingly, even effective controls can provide only reasonable assurance with respect to financial statement preparation and presentation.

Equitable’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.  Based on this assessment, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2005.

Management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2005, has been audited by Ernst & Young, LLP, the independent registered public accounting firm that also audited the Company’s Consolidated Financial Statements.  Ernst & Young’s attestation report on management’s assessment of the Company’s internal control over financial reporting appears in Part II, Item 8 of this Annual Report on Form 10-K and is incorporated by reference herein.

The Company has co-principal financial officers, Philip P. Conti, the Vice President and Chief Financial Officer, and David L. Porges, the Executive Vice President, Finance and Administration.  Effective January 31, 2006, Mr. Conti assumed responsibility for the accounting and financial reporting functions, and continued his responsibility for the treasury, business development, planning and risk management functions.  Mr. Conti reports to Mr. Porges, who has oversight responsibility for finance, human resources, legal, information technology, and environmental and safety compliance.  Mr. Conti and Mr. Porges collaborate with respect to the Company’s financial reporting.  Both co-principal financial officers assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005 as described above and have made the certifications required by Rule 13a-14(a)/15d-14(a) and Section 1350 which are attached to this Form 10-K as Exhibits 31.2 and 31.3, and 32, respectively.

Item 9B.Other Information

Not Applicable.

89

PART III

Item 10.Directors and Executive Officers of the Registrant

The following information is incorporated herein by reference from the Company’s definitive proxy statement relating to the annual meeting of the shareholders to be held on April 12, 2006, which will be filed with the Commission within 120 days after the close of the Company’s fiscal year ended December 31, 2005:

•Information required by Item 401 of Regulation S-K with respect to directors is incorporated herein by reference from the section captioned “Item No. 1 - Election of Directors” in the Company’s definitive proxy statement;

•Information required by Item 405 of Regulation S-K with respect to compliance with Section 16(a) of the Exchange Act is incorporated by reference from the section captioned “Stock Ownership and Performance – Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s definitive proxy statement;

•Information required by Item 401 of Regulation S-K with respect to disclosure of audit committee financial expert is incorporated herein by reference from the section captioned “Meetings of the Board of Directors and Committee Membership-Audit Committee” in the Company’s definitive proxy statement; and

•Information required by Item 401 of Regulation S-K with respect to the identification of the members of the Audit Committee is incorporated by reference from the section captioned “Meetings of the Board of Directors and Committee Membership-Audit Committee” in the Company’s definitive proxy statement.

Information required by Item 401 of Regulation S-K with respect to executive officers is included after Item 4 at the end of Part I of this Form 10-K under the heading “Executive Officers of the Registrant (as of February 22, 2006),” and is incorporated herein by reference.

The Company has adopted a code of ethics applicable to all directors and employees, including the principal executive officer, principal financial officer and principal accounting officer.  The code of ethics is posted on the Company’s website, http://www.eqt.com (under the “Corporate Governance” caption of the Investor Relations page) and a printed copy will be delivered to anyone who requests one by writing to the corporate secretary at Equitable Resources, Inc., c/o corporate secretary, 225 North Shore Drive, Pittsburgh, Pennsylvania 15212.  The Company intends to satisfy the disclosure requirement regarding certain amendments to, or waivers from, provisions of its code of ethics by posting such information on the Company’s website.

By certification dated April 26, 2005, the Company’s Chief Executive Officer certified to the New York Stock Exchange (NYSE) that he was not aware of any violation by the Company of NYSE corporate governance listing standards.

Item 11.Executive Compensation

Information required by Item 11 is incorporated herein by reference from the sections captioned “Executive Compensation,” “Employment and Other Arrangements” and “Directors’ Compensation and Retirement Program” in the Company’s definitive proxy statement relating to the annual meeting of shareholders to be held on April 12, 2006, which will be filed with the Commission within 120 days after the close of the Company’s fiscal year ended December 31, 2005.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by Item 12 is incorporated herein by reference from the sections captioned “Stock Ownership and Performance” and “Equity Compensation Plans” in the Company’s definitive proxy statement relating to the annual meeting of shareholders to be held on April 12, 2006, which will be filed with the Commission within 120 days after the close of the Company’s fiscal year ended December 31, 2005.

90

Item 13.Certain Relationships and Related Transactions

None.

Item 14.Principal Accounting Fees and Services

Information required by Item 14 is incorporated herein by reference from the section captioned “Item No. 2 — Ratification of Appointment of Independent Registered Public Accounting Firm” in the Company’s definitive proxy statement relating to the annual meeting of stockholders to be held on April 12, 2006, which will be filed with the Commission within 120 days after the close of the Company’s fiscal year ended December 31, 2005.

91

PART IV

Item 15.  Exhibits, Financial Statement Schedules

(a)	1.	Financial Statements
		The financial statements listed in the accompanying index to financial statements are filed as part of this Annual Report on Form 10-K.
	2.	Financial Statement Schedule
		The financial statement schedule listed in the accompanying index to financial statements and financial schedule is filed as part of this Annual Report on Form 10-K.
	3.	Exhibits
		The exhibits listed on the accompanying index to exhibits (pages 94 through 98) are filed as part of this Annual Report on Form 10-K.

EQUITABLE RESOURCES, INC.

INDEX TO FINANCIAL STATEMENTS COVERED

BY REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

Item 15 (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, 2005	46
Statements of Consolidated Cash Flows for each of the three years in the period ended December 31, 2005	47
Consolidated Balance Sheets as of December 31, 2005 and 2004	48
Statements of Common Stockholders’ Equity for each of the three years in the period ended December 31, 2005	50
Notes to Consolidated Financial Statements	51

2.Schedule for the Years Ended December 31, 2005, 2004 and 2003 included in Part IV:

II — Valuation and Qualifying Accounts and Reserves 93

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.

92

EQUITABLE RESOURCES, INC. AND SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

FOR THE THREE YEARS ENDED DECEMBER 31, 2005

Column A	Column B		Column C				Column D		Column E
Description	Balance at Beginning of Period		Additions Charged to Costs and Expenses		Additions Charged to Other Accounts (a)		Deductions (b)		Balance at End of Period
	(Thousands)
2005
Accumulated provisions for doubtful accounts	$	29,836	$	8,273	$	5,176	$	19,956	$	23,329
2004
Accumulated provisions for doubtful accounts	$	16,153	$	19,659	$	3,332	$	9,308	$	29,836
2003
Accumulated provisions for doubtful accounts	$	14,694	$	13,460	$	—	$	12,001	$	16,153

Note:

(a)Energy Assistance Program surcharge included in residential rates.

(b)Customer accounts written off, less recoveries.

93

INDEX TO EXHIBITS

Exhibits	Description	Method of Filing
3.01	Restated Articles of Incorporation (amended through 7/18/05)	Filed as Exhibit 3.01 to Form 8-K filed on July 18, 2005
3.02	Bylaws of the Company (amended through January 12, 2005 and approved February 4, 2005)	Filed as Exhibit 3.01 to Form 8-K filed on February 10, 2005
4.01 (a)	Indenture dated as of April 1, 1983 between the Company and Pittsburgh National Bank	Filed as Exhibit 4.1 to Registration Statement on From S-3 filed April 24, 1986 (Registration No. 2-80575)
4.01 (b)	Instrument appointing Bankers Trust Company as successor trustee to Pittsburgh National Bank	Filed as Exhibit 4.01 (b) to Form 10-K for the year ended December 31, 1998
4.01 (c)	Supplemental Indenture dated March 15, 1991 with Bankers Trust Company eliminating limitations on liens and additional funded debt	Filed as Exhibit 4.01 (f) to Form 10-K for the year ended December 31, 1996
4.01 (d)	Resolution adopted August 19, 1991 by the Ad Hoc Finance Committee of the Board of Directors of the Company Addenda Nos. 1 through 27, establishing the terms and provisions of the Series A Medium-Term Notes	Filed as Exhibit 4.01 (g) to Form 10-K for the year ended December 31, 1996
4.01 (e)	Resolutions adopted July 6, 1992 and February 19, 1993 by the Ad Hoc Finance Committee of the Board of Directors of the Company and Addenda Nos. 1 through 8, establishing the terms and provisions of the Series B Medium-Term Notes	Filed as Exhibit 4.01 (h) to Form 10-K for the year ended December 31, 1997
4.01 (f)	Resolution adopted July 14, 1994 by the Ad Hoc Finance Committee of the Board of Directors of the Company and Addenda Nos. 1 and 2, establishing the terms and provisions of the Series C Medium-Term Notes	Filed as Exhibit 4.01 (i) to Form 10-K for the year ended December 31, 1995
4.02 (a)	Indenture with The Bank of New York, as successor to Bank of Montreal Trust Company, a Trustee, dated as of July 1, 1996	Filed as Exhibit 4.01 (a) to Form S-4 Registration Statement (#333-103178) filed on February 13, 2003
4.02 (b)	Resolution adopted January 18 and July 18, 1996 by the Board of Directors of the Company and Resolutions adopted July 18, 1996 by the Executive Committee of the Board of Directors of the Company, establishing the terms and provisions of the 7.75% Debentures issued July 29, 1996	Filed as Exhibit 4.01 (j) to Form 10-K for the year ended December 31, 1996
4.02 (c)	Officer’s Declaration dated February 20, 2003 establishing the terms of the issuance and sale of the Notes of the Company in an aggregate amount of up to $200,000,000	Filed as Exhibit 4.01 (c) to Form S-4 Registration Statement (#333-104392) filed on April 8, 2003
4.02 (d)	Officer’s Declaration dated November 7, 2002 establishing the terms of the issuance and sale of the Notes of the Company in an aggregate amount of up to $200,000,000	Filed as Exhibit 4.01 (c) to Form S-4/A Registration Statement (#333-103178) filed on March 12, 2003

Each management contract and compensatory arrangement in which any director or any named executive officer participates has been marked with an asterisk (*).

94

INDEX TO EXHIBITS

Exhibits	Description	Method of Filing
4.02 (e)	Officer’s Declaration dated September 27, 2005 establishing the terms of the issuance and sale of the Notes of the Company in an aggregate amount of $150,000,000	Filed as Exhibit 4.01 (b) to Form S-4 Registration Statement (#333-104392) filed on October 28, 2005
4.03	Amended and Restated Rights Agreement dated as of January 23, 2004 between the Company and Mellon Investor Services, LLC, as Rights Agent, setting forth the amended and restated terms of the Company’s Preferred Stock Purchase Rights Plan	Filed as Exhibit 1 to Registration Statement on Form 8-A/A filed January 29, 2004
4.04 (a)	Revolving Credit Agreement dated as of August 11, 2005	Filed as Exhibit 4.01 to Form 10-Q for the quarter ended September 30, 2005
4.04(b)	First Amendment to Revolving Credit Agreement Dated as of December 14, 2005	Filed herewith as Exhibit 4.04(b)
* 10.01 (a)	1999 Equitable Resources, Inc. Long-Term Incentive Plan (amended and restated October 20, 2004)	Filed as Exhibit 10.1 to Form 10-Q for the quarter ended September 30, 2004
* 10.01 (b)	Form of Participant Award Agreement (Restricted Stock) under 1999 Equitable Resources, Inc. Long-Term Incentive Plan	Filed as Exhibit 10.05 to Form 10-K for the year ended December 31, 2004
* 10.01 (c)	Form of Participant Award Agreement (Stock Option) under 1999 Equitable Resources, Inc. Long-Term Incentive Plan	Filed as Exhibit 10.3 to Form 10-Q for the quarter ended September 30, 2004
* 10.01 (d)	1994 Equitable Resources, Inc. Long-Term Incentive Plan	Filed as Exhibit 10.06 to Form 10-K for the year ended December 31, 1999
* 10.01 (e)	Equitable Resources, Inc. 2002 Executive Performance Incentive Program (as amended and restated May 1, 2003 and April 13, 2004)	Filed as Exhibit 10.2 to Form 10-Q for the quarter ended June 20, 2004
* 10.01 (f)	Form of Participant Award Agreement under the Equitable Resources, Inc. 2002 Executive Performance Incentive Program	Filed as Exhibit 10.4 to Form 10-Q for the quarter ended September 30, 2004
* 10.01 (g)	Equitable Resources, Inc. 2003 Executive Performance Incentive Program (as amended and restated April 13, 2004)	Filed as Exhibit 10.3 to Form 10-Q for the quarter ended June 30, 2004
* 10.01 (h)	Form of Participant Award Agreement under the Equitable Resources, Inc. 2003 Executive Performance Incentive Program	Filed as Exhibit 10.5 to Form 10-Q for the quarter ended September 30, 2004
* 10.01 (i)	Equitable Resources, Inc. 2005 Executive Performance Incentive Program	Filed as Exhibit 10.01 to Form 8-K filed on March 1, 2005
* 10.01 (j)	Form of Participant Award Agreement under the Equitable Resources, Inc. 2005 Executive Performance Incentive Program	Filed as Exhibit 10.02 to Form 8-K filed on March 1, 2005

Each management contract and compensatory arrangement in which any director or any named executive officer participates has been marked with an asterisk (*).

95

INDEX TO EXHIBITS

Exhibits	Description	Method of Filing
* 10.02	Equitable Resources, Inc. Breakthrough Long-Term Incentive Plan with certain executives of the Company (as amended)	Filed as Exhibit 10.01 to Form 10-Q for the quarter ended September 30, 2000
* 10.03	1999 Equitable Resources, Inc. Non-Employee Directors’ Stock Incentive Plan (as amended May 26, 1999)	Filed as Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 1999
* 10.04	Equitable Resources, Inc. Executive Short-Term Incentive Plan	Filed as Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2001
* 10.05	Equitable Resources, Inc. 2004 Short-Term Incentive Plan	Filed as Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2004
* 10.06	Equitable Resources, Inc. 2005 Short-Term Incentive Plan	Filed as Exhibit 10.1 to Form 8-K filed on December 6, 2004
* 10.07	Equitable Resources, Inc. Directors’ Deferred Compensation Plan (as amended and restated May 15, 2003)	Filed as Exhibit 10.10 to Form 10-Q for the quarter ended June 30, 2003
* 10.08	Equitable Resources, Inc. 2005 Directors’ Deferred Compensation Plan (as amended and restated December 15, 2005)	Filed herewith as Exhibit 10.08
* 10.09	Equitable Resources, Inc. Employee Deferred Compensation Plan (amended and restated effective December 3, 2003)	Filed as Exhibit 10.12 to Form 10-K for the year ended December 31, 2003
* 10.10	Equitable Resources, Inc. 2005 Employee Deferred Compensation Plan	Filed as Exhibit 10.1 to Form 8-K filed on December 28, 2004
* 10.11 (a)	Employment Agreement dated as of May 4, 1998 with Murry S. Gerber	Filed as Exhibit 10.2 to Form 10-Q for the quarter ended June 30, 1998
* 10.11 (b)	Amendment No. 1 to Employment Agreement with Murry S. Gerber	Filed as Exhibit 10.09 (b) to Form 10-K for the year ended December 31, 1999
* 10.11 (c)	Amendment No. 2 to Employment Agreement with Murry S. Gerber	Filed as Exhibit 10.09 (c) to Form 10-Q for the quarter ended September 30, 2002
* 10.11 (d)	Amendment No. 3 to Employment Agreement with Murry S. Gerber	Filed as Exhibit 10.13 (d) to Form 10-K for the year ended December 31, 2003
* 10.11 (e)	Change in Control Agreement dated September 1, 2002 by and between Equitable Resources, Inc. and Murry S. Gerber	Filed as Exhibit 10.10 to Form 10-Q for the quarter ended September 30, 2002
* 10.11 (f)	Supplemental Executive Retirement Agreement dated as of May 4, 1998 with Murry S. Gerber	Filed as Exhibit 10.4 to Form 10-Q for the quarter ended June 30, 1998
* 10.11 (g)	Satisfaction Agreement In Respect of Supplemental Executive Retirement Agreement dated as of February 22, 2006 with Murry S. Gerber	Filed herewith as Exhibit 10.11(g)
* 10.11 (h)	Amended and Restated Post-Termination Confidentiality and Non-Competition Agreement dated December 1, 1999 with Murry S. Gerber	Filed as Exhibit 10.12 to Form 10-K for the year ended December 31, 1999
* 10.12 (a)	Employment Agreement dated as of July 1, 1998 with David L. Porges	Filed as Exhibit 10.1 to Form 10-Q for the quarter ended September 30, 1998
* 10.12 (b)	Amendment No. 1 to Employment Agreement with David L. Porges	Filed as Exhibit 10.13 (b) to Form 10-K for the year ended December 31, 1999
* 10.12 (c)	Amendment No. 2 to Employment Agreement with David L. Porges	Filed as Exhibit 10.13 (c) to Form 10-Q for the quarter ended September 30, 2002

Each management contract and compensatory arrangement in which any director or any named executive officer participates has been marked with an asterisk (*).

96

INDEX TO EXHIBITS

Exhibits	Description	Method of Filing
* 10.12 (d)	Amendment No. 3 to Employment Agreement with David L. Porges	Filed as Exhibit 10.14 (d) to Form 10-K for the year ended December 31, 2003
* 10.12 (e)	Change in Control Agreement dated September 1, 2002 by and between Equitable Resources, Inc. and David L. Porges	Filed as Exhibit 10.14 to Form 10-Q for the quarter ended September 30, 2002
* 10.12(f)	Amended and Restated Post-Termination Confidentiality and Non-Competition Agreement dated December 1, 1999 with David L. Porges	Filed as Exhibit 10.15 to Form 10-K for the year ended December 31, 1999
* 10.13 (a)	Change in Control Agreement dated September 1, 2002 by and between Equitable Resources, Inc. and Philip P. Conti	Filed as Exhibit 10.26 to Form 10-Q for the quarter ended September 30, 2002
* 10.13 (b)	Non-Compete Agreement dated October 30, 2000 by and between Equitable Resources, Inc. and Philip P. Conti	Filed as Exhibit 10.27 (b) to Form 10-K for the year ended December 31, 2004
* 10.14(a)	Agreement dated May 24, 1996 with Phyllis A. Domm for deferred payment of 1996 director fees beginning May 24, 1996	Filed as Exhibit 10.14 (a) to Form 10-K for the year ended December 31, 1996
* 10.14 (b)	Agreement dated November 27, 1996 with Phyllis A. Domm for deferred payment of 1997 director fees	Filed as Exhibit 10.14 (b) to Form 10-K for the year ended December 31, 1996
* 10.14 (c)	Agreement dated November 30, 1997 with Phyllis A. Domm for deferred payment of 1998 director fees	Filed as Exhibit 10.14 (c) to Form 10-K for the year ended December 31, 1997
* 10.14 (d)	Agreement dated December 5, 1998 with Phyllis A. Domm for deferred payment of 1999 director fees	Filed as Exhibit 10.20 (d) to Form 10-K for the year ended December 31, 1998
* 10.15	Form of Indemnification Agreement between Equitable Resources, Inc. and all executive officers and outside directors	Filed as Exhibit 10.41 to Form 10-K for the year ended December 31, 2002
* 10.16	Directors’ Compensation and Retirement Program	Filed herewith as Exhibit 10.16
* 10.17 (a)	Change in Control Agreement dated December 1, 1999 by and between Equitable Resources, Inc. and Randall L. Crawford	Filed as Exhibit 10.18(b) to Form 10-K for the year ended December 31, 2003
* 10.17 (b)	Non-Compete Agreement dated December 1, 1999 by and between Equitable Resources, Inc. and Randall L. Crawford	Filed herewith as Exhibit 10.17 (b)
* 10.18 (a)	Change in Control Agreement dated October 23, 2000 by and between Equitable Resources, Inc. and Charlene J. Gambino (Petrelli)	Filed herewith as Exhibit 10.18 (a)
* 10.18 (b)	Non-Compete Agreement dated October 23, 2000 by and between Equitable Resources, Inc. and Charlene J. Gambino (Petrelli)	Filed herewith as Exhibit 10.18 (b)
* 10.19 (a)	Change in Control Agreement dated November 6, 2004 by and between Equitable Resources, Inc. and Diane L. Prier	Filed herewith as Exhibit 10.19 (a)
* 10.19 (b)	Non-Compete Agreement dated November 6, 2004 by and between Equitable Resources, Inc. and Diane L. Prier	Filed herewith as Exhibit 10.19 (b)

Each management contract and compensatory arrangement in which any director or any named executive officer participates has been marked with an asterisk (*).

97

INDEX TO EXHIBITS

Exhibits	Description	Method of Filing
21	Schedule of Subsidiaries	Filed herewith as Exhibit 21
23.01	Consent of Independent Registered Public Accounting Firm	Filed herewith as Exhibit 23.01
23.02	Consent of Independent Petroleum Engineers	Filed herewith as Exhibit 23.02
31.1	Rule 13(a)-14(a) Certification of Principal Executive Officer	Filed herewith as Exhibit 31.1
31.2	Rule 13(a)-14(a) Certification of Co-Principal Financial Officer	Filed herewith as Exhibit 31.2
31.3	Rule 13(a)-14(a) Certification of Co-Principal Financial Officer	Filed herewith as Exhibit 31.3
32	Section 1350 Certification of Principal Executive Officer and Co-Principal Financial Officers	Filed herewith as Exhibit 32

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.

Each management contract and compensatory arrangement in which any director or any named executive officer participates has been marked with an asterisk (*).

98

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.
By:	/s/   MURRY S. GERBER
	Murry S. Gerber
	Chairman, President and Chief Executive Officer
	February 22, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/    MURRY S. GERBER	Chairman, President and	February 22, 2006
Murry S. Gerber	Chief Executive Officer
(Principal Executive Officer)
/s/    DAVID L. PORGES	Vice Chairman and Executive	February 22, 2006
David L. Porges	Vice President, Finance and
(Co-Principal Financial Officer)	Administration
/s/    PHILIP P. CONTI	Vice President and	February 22, 2006
Philip P. Conti	Chief Financial Officer
(Co-Principal Financial Officer)
/s/    JOHN A. BERGONZI	Vice President and	February 22, 2006
John A. Bergonzi	Corporate Controller
(Principal Accounting Officer)
/s/    VICKY A. BAILEY	Director	February 22, 2006
Vicky A. Bailey
/s/    PHYLLIS A. DOMM	Director	February 22, 2006
Phyllis A. Domm
/s/    BARBARA S. JEREMIAH	Director	February 22, 2006
Barbara S. Jeremiah
/s/    THOMAS A. MCCONOMY	Director	February 22, 2006
Thomas A. McConomy
/s/    GEORGE L. MILES, JR.	Director	February 22, 2006
George L. Miles, Jr.
/s/    JAMES E. ROHR	Director	February 22, 2006
James E. Rohr
/s/    DAVID S. SHAPIRA	Director	February 22, 2006
David S. Shapira
/s/    LEE T. TODD, JR.	Director	February 22, 2006
Lee T. Todd, Jr.
/s/    JAMES W. WHALEN	Director	February 22, 2006
James W. Whalen

99

EX-4.04(B)

Exhibit 4.04(b)

FIRST AMENDMENT TO CREDIT AGREEMENT

(Commitment Increase, Extension of Maturity Date, and

Amendment To Credit Agreement)

This FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into effective as of December 14, 2005 (the “Increase and Amendment Effective Date”), among EQUITABLE RESOURCES, INC., a Pennsylvania corporation, as borrower (the “Borrower”), the financial institutions parties to the Credit Agreement hereinafter referenced (collectively, the “Lenders”), BANK OF AMERICA, N.A., as administrative agent (in such capacity, the “Administrative Agent”), a letter of credit issuer, and swing line lender, and JPMORGAN CHASE BANK, N.A., as syndication agent and an L/C Issuer.

WHEREAS, the Borrower, the Lenders, the Administrative Agent, and the other agents named therein are parties to that certain Credit Agreement dated as of August 11, 2005 (the “Credit Agreement”); and

WHEREAS, the Borrower has elected to increase the Commitments pursuant to Section 2.15 of the Credit Agreement; and

WHEREAS, the Borrower has requested that the Credit Agreement be amended to increase the Letter of Credit Sublimit to $1,000,000,000, and that Section 2.15 of the Credit Agreement be amended to permit an additional one-time increase in the Commitments in the future up to $1,500,000,000; and

WHEREAS, the Borrower has obtained the regulatory approvals required for extension of the Stated Maturity Date to August 10, 2010, and on the Increase and Amendment Effective Date the Borrower will deliver the remaining documentation required pursuant to Section 2.14(a) of the Credit Agreement as a condition to such extension.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto hereby agree as follows:

SECTION 1.Definitions. Unless otherwise defined in this Amendment, terms used in this Amendment which are defined in the Credit Agreement shall have the meanings assigned to such terms in the Credit Agreement. The interpretive provisions set forth in Section 1.02 of the Credit Agreement shall apply to this Amendment.

SECTION 2.Extension of Stated Maturity Date Pursuant to Section 2.14 of the Credit Agreement. Effective as of the Increase and Amendment Effective Date, the Stated Maturity Date is extended to August 10, 2010. Notice by the Administrative Agent pursuant to Section 5(c) of this Amendment shall constitute notice of the extension of the Stated Maturity Date as required by the last sentence of Section 2.14(a) of the Credit Agreement.

SECTION 3.Increase in Commitments Pursuant to Section 2.15 of the Credit Agreement.

(a) Effective as of the Increase and Amendment Effective Date, the aggregate amount of the Commitments is increased to $1,000,000,000 and Schedule 2.01of the Credit Agreement (Commitments and Pro Rata Shares) is revised to read as set forth on Schedule 2.01 attached hereto.

(b)To the extent that Section 2.15of the Credit Agreement requires notice(s) to Lenders that are different than those that have been given in connection with this Amendment, the Lenders waive such requirements, and agree that the increase in Commitments herein described is effective and the conditions

of Section 2.15 of the Credit Agreement are deemed satisfied as of the Increase and Amendment Effective Date.

SECTION 4.Amendments to Credit Agreement. Effective as of the Increase and Amendment Effective Date, the Credit Agreement is hereby amended as follows:

(a)The definition of “L/C Issuer”  is hereby amended by deleting “$325,000,000” and inserting “$500,000,000” in lieu thereof.

(b)The definition of “Letter of Credit Sublimit” is hereby amended by deleting “$650,000,000” and inserting “$1,000,000,000” in lieu thereof.

(c)Section 2.15 (Increase in Commitments) is hereby amended by deleting the number “$1,000,000,000” each time that it appears and inserting “$1,500,000,000” in lieu thereof.

SECTION 5.Conditions to Increase and Amendment Effective Date.

(a) This Amendment shall be effective on the Increase and Amendment Effective Date, subject to satisfaction of the following conditions precedent:

(i) The Administrative Agent shall have received the following, each of which shall be originals or facsimiles (followed promptly by originals), each dated as of the Increase and Amendment Effective Date and each in form and substance satisfactory to the Administrative Agent:

(A) counterparts of this Amendment, executed by the Borrower, the Required Lenders, and each Lender whose Commitment is hereby increased;

(B) corporate resolutions certified by the Secretary or Assistant Secretary of the Borrower meeting the requirements of Section 2.14(a)(iii) and Section 2.15(b)(i) of the Credit Agreement;

(C)  an opinion of counsel to the Borrower (I) opining that the execution, delivery and performance of the First Amendment satisfy the matters set forth in paragraph 2 of the opinion of internal counsel attached as Exhibit E-2 to the Credit Agreement, and (II) meeting the requirements of Section 2.14(a)(ii),  Section 2.15(b)(i) and Section 2.15(b)(iv) of the Credit Agreement;

(D) a certificate of a Responsible Officer of the Borrower (I) certifying as to the matters required by Section 2.15(b)(ii) of the Credit Agreement, and (II) certifying that attached to such certificate are true and correct copies of the Securities Certificate registered with the Pennsylvania Public Utility Commission and the Order of the Pennsylvania Public Utility Commission approving the Borrower’s incurring indebtedness under the Credit Agreement in the amount of $1,000,000,000 and with a maturity date of the August 10, 2010; and

(E) to the extent requested by any Lender, a Note in a maximum principal amount equal to such Lender’s Commitment, which Note shall be a renewal and replacement of, and shall be given in substitution and exchange for, but not in payment of, those Notes held by such Lender prior to the date hereof.

(b) The Borrower shall have paid all fees and expenses that are required to be paid as of the Increase and Amendment Effective Date.

(c) The Administrative Agent shall notify the Borrower and the Lenders when it has received the documents required by this Section 5 as a condition to the Increase and Amendment Effective Date.

SECTION 6.Acknowledgment and Ratification. The Borrower agrees and acknowledges that the execution, delivery, and performance of this Amendment shall, except as expressly provided herein, in no way release, diminish, impair, reduce, or otherwise affect the obligations of the Borrower under the Loan Documents, which Loan Documents shall remain in full force and effect.

SECTION 7.Borrower’s Representations and Warranties. The Borrower represents and warrants to the Lenders (with the knowledge and intent that the Lenders are relying upon the same in entering into this Amendment) that as of the Increase and Amendment Effective Date and as of the date of its execution of this Amendment, before and after giving effect to the increase in Commitments described herein, that:

(a)(i) the representations and warranties set forth in the Credit Agreement are true and correct in all material respects as though made on the date hereof, except to the extent that any of them speak to a different specific date, in which case they are true and correct as of such earlier date, and (ii) no Default or Event of Default exists;

(b)the execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate action, and do not and will not contravene the terms of any of the Borrower’s organizational documents or any Law or any indenture or loan or credit agreement or any other material agreement or instrument to which the Borrower is a party or by which it is bound or to which it or its properties are subject;

(c)no authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority or any other person are necessary for the execution, delivery or performance by the Borrower of this Amendment or for the validity or enforceability thereof, or for the borrowing by the Borrower of the full amount of the Commitments as increased hereby, other than routine informational filings with the SEC and/or other Governmental Authorities; and

(d)this Amendment constitutes the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability, and by judicial discretion regarding the enforcement of or any applicable laws affecting remedies (whether considered in a court of law or a proceeding in equity).

SECTION 8.Administrative Agent, L/C Issuers and Lenders Make No Representations or Warranties. None of the Administrative Agent, the L/C Issuers, nor any Lender (a) makes any representation or warranty nor assumes any responsibility with respect to any statements, warranties, or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of the Credit Agreement, the Loan Documents, or any other instrument or document furnished pursuant thereto, or (b) makes any representation or warranty nor assumes any responsibility with respect to the financial condition of the Borrower or any other Person or the performance or observance by such Persons of any of their obligations under the Loan Documents, or any other instrument or document furnished pursuant thereto.

SECTION 9.Payment of Attorney Costs. The Borrower agrees to pay the reasonable Attorney Costs of the Administrative Agent incurred in connection with the preparation, execution and delivery of this Amendment and any other documents executed by the Borrower in connection herewith.

SECTION 10.Effect of Amendment.

(a)This Amendment (i) except as expressly provided herein, shall not be deemed to be a consent to the modification or waiver of any other term or condition of the Credit Agreement or of any of the instruments or agreements referred to therein and (ii) shall not prejudice any right or rights which the Administrative Agent or the Lenders may now have under or in connection with the Credit Agreement, as amended by this Amendment. Except as otherwise expressly provided by this Amendment, all of the terms, conditions and provisions of the Credit Agreement shall remain the same. It is declared and agreed by each of the parties hereto that the Credit Agreement, as amended hereby, shall continue in full force and effect, and that this Amendment and such Credit Agreement shall be read and construed as one instrument.

(b)From and after the Increase and Amendment Effective Date, (i) each reference in the Credit Agreement, including the schedules and exhibits thereto and the other documents delivered in connection therewith, to the “Credit Agreement,” “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, shall mean and be a reference to the Credit Agreement as amended hereby, and (ii) each reference in the Credit Agreement, including the schedules and exhibits thereto and the other documents delivered in connection therewith, to “$650,000,000” shall be deemed to be and shall be a reference to “$1,000,000,000”.

SECTION 11.Miscellaneous. This Amendment shall for all purposes be construed in accordance with and governed by the laws of the State of New York and applicable federal law. The captions in this Amendment are for convenience of reference only and shall not define or limit the provisions hereof. This Amendment may be executed in separate counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute one instrument. In proving this Amendment, it shall not be necessary to produce or account for more than one such counterpart. This Amendment, and any documents required or requested to be delivered pursuant to Section 3 hereof, may be delivered by facsimile transmission of the relevant signature pages hereof and thereof, as applicable. This Amendment shall be a “Loan Document” as defined in the Credit Agreement.

SECTION 0.Entire Agreement. THE CREDIT AGREEMENT (AS AMENDED BY THIS AMENDMENT) AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[SIGNATURES BEGIN ON NEXT PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the date and year first above written.

EQUITABLE RESOURCES, INC.
By:	/s/ Philip P. Conti
Name:		Philip P. Conti
Title:		Vice President, CFO and Treasurer

[Signature Page to First Amendment to
Equitable Resources, Inc. Revolving Credit Agreement]

BANK OF AMERICA, N.A.,
as Administrative Agent
By:	/s/ Ronald E. McKaig
Name:		Ronald E. McKaig
Title:		Senior Vice President

BANK OF AMERICA, N.A.,
as a Lender, an L/C Issuer, and Swing Line Lender
By:	/s/ Ronald E. McKaig
Name:		Ronald E. McKaig
Title:		Senior Vice President

JPMORGAN CHASE BANK, N.A.
as a Lender and an L/C Issuer
By:	/s/ Charles Kingswell-Smith
Name:		Charles Kingswell-Smith
Title:		Vice President

THE BANK OF TOKYO-MITSUBISHI, LTD., HOUSTON AGENCY,
as a Lender and Co-Documentation Agent
By:	/s/ Kelton Glasscock
Name:		Kelton Glasscock
Title:		Vice-President & Manager

CITIBANK, N.A.,
as a Lender and Co-Documentation Agent
By:	/s/ Robert J. Harrity, Jr.
Name:		Robert J. Harrity, Jr.
Title:		Managing Director

PNC BANK, NATIONAL ASSOCIATION
as a Lender and Co-Documentation Agent
By:	/s/ Thomas A. Majeski
Name:		Thomas A. Majeski
Title:		Vice President

BARCLAYS BANK PLC,
as a Lender
By:	/s/ David Barton
Name:		David Barton
Title:		Associate Director

DEUTSCHE BANK AG NEW YORK BRANCH,
as a Lender
By:	/s/ Marcus Tarkington
Name:		Marcus Tarkington
Title:		Director
By:	/s/ Rainer Meier
Name:		Rainer Meier
Title:		Assistant Vice President

HARRIS NESBITT FINANCING, INC.,
as a Lender
By:	/s/ Cahal Carmody
Name:		Cahal Carmody
Title:		Vice President

MELLON BANK, N.A.,
as a Lender
By:	/s/ Mark W. Rogers
Name:		Mark W. Rogers
Title:		Vice President

SUNTRUST BANK,
as a Lender
By:	/s/ Kelley Brandenburg
Name:		Kelley Brandenburg
Title:		Vice President

WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender
By:	/s/ Paul Pritchett
Name:		Paul Pritchett
Title:		Assistant Vice President

BNP PARIBAS,
as a Lender
By:	/s/ Betsy Jocher
Name:		Betsy Jocher
Title:		Vice President
By:	/s/ Polly Schott
Name:			Polly Schott
Title:			Vice President

FIFTH THIRD BANK,
as a Lender
By:	/s/ Jim Janovsky
Name:		Jim Janovsky
Title:		Vice President

SCHEDULE 2.01

COMMITMENTS

AND PRO RATA SHARES

Institution	Allocation		Percentage
Bank of America, N.A.	$	107,500,000	10.750000000	%
JPMorgan Chase Bank, N.A.	$	107,500,000	10.750000000	%
The Bank of Tokyo-Mitsubishi, Ltd.	$	90,000,000	9.000000000	%
Citibank, N.A.	$	90,000,000	9.000000000	%
PNC Bank, National Association	$	90,000,000	9.000000000	%
Barclays Bank PLC	$	77,500,000	7.750000000	%
Deutsche Bank AG New York Branch	$	77,500,000	7.750000000	%
SunTrust Bank	$	77,500,000	7.750000000	%
Wachovia Bank, National Association	$	77,500,000	7.750000000	%
BNP Paribas	$	50,000,000	5.000000000	%
Mellon Bank, N.A.	$	50,000,000	5.000000000	%
Harris Nesbitt Financing, Inc.	$	45,000,000	4.500000000	%
Fifth Third Bank	$	35,000,000	3.500000000	%
The Bank of New York	$	25,000,000	2.500000000	%
Total Commitments	$	1,000,000,000	100.000000000	%

[Signature Page to First Amendment to

Equitable Resources, Inc. Revolving Credit Agreement]

EX-10.08

Exhibit 10.08

Equitable Resources, Inc.

2005 DIRECTORS’ DEFERRED COMPENSATION PLAN

Amended and Restated December 15, 2005

ARTICLE I

1.1Purpose of Plan.

This Equitable Resources, Inc. 2005 Directors’ Deferred Compensation Plan (the “2005 Plan”) hereby is created to provide an opportunity for the members of the Board of Directors of Equitable Resources, Inc. (the “Board”) to defer payment of all or a portion of the fees to which they are entitled as compensation for their services as members of the Board. The 2005 Plan also shall administer the payment of stock units and phantom stock awarded pursuant to the 1999 Equitable Resources, Inc. Non-Employee Directors’ Stock Incentive Plan (the “NEDSIP”).

ARTICLE II

DEFINITIONS

When used in this 2005 Plan and initially capitalized, the following words and phrases shall have the meanings indicated:

2.1“Account” means the total of a Participant’s Deferral Account and Phantom Stock Account under the 2005 Plan.

2.2“Beneficiary” means the person or persons designated or deemed to be designated by the Participant pursuant to Section 7.1 of the 2005 Plan to receive benefits payable under the 2005 Plan in the event of the Participant’s death.

2.3“Change in Control” means any of the following events:

(a)The sale or other disposition by the Company of all or substantially all of its assets to a single purchaser or to a group of purchasers, other than to a corporation with respect to which, following such sale or disposition, more than eighty percent (80%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding

1

voting securities entitled to vote generally in the election of the Board of Directors is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Company common stock and the combined voting power of the then outstanding voting securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Company common stock and voting power immediately prior to such sale or disposition.

(b)The acquisition in one or more transactions by any person or group, directly or indirectly, of beneficial ownership of twenty percent (20%) or more of the outstanding shares of Company common stock or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of the Board; provided, however, that any acquisition by (x) the Company or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (y) any person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act (as such rule is in effect as of February 25, 2004) to file a statement on Schedule 13G with respect to its beneficial ownership of Company common stock and other voting securities whether or not such person shall have filed a statement on Schedule 13G, unless such person shall have filed a statement on Schedule 13D with respect to beneficial ownership of fifteen percent (15%) or more of the Company’s voting securities, shall not constitute a Change in Control;

(c)The Company’s termination of its business and liquidation of its assets;

2

(d)The reorganization, merger or consolidation of the Company into or with another person or entity, by which reorganization, merger or consolidation the persons who hold one hundred percent (100%) of the voting securities of the Company prior to such reorganization, merger or consolidation receive or continue to hold less than sixty percent (60%) of the outstanding voting shares of the new or continuing corporation; or

(e)If, during any two-year period, less than a majority of the members of the Board are persons who were either (i) nominated or recommended for election by at least two-thirds vote of the persons who were members of the Board or Nominating Committee of the Board at the beginning of the period, or (ii) elected by at least two-thirds vote of the persons who were members of the Board at the beginning of the period.

2.4“Code” means the Internal Revenue Code of 1986, as amended.

2.5“Committee” means the Compensation Committee of the Board.

2.6“Company” means Equitable Resources, Inc. and any successor thereto.

2.7“Deferral Account” means the recordkeeping account established on the books and records of the Company to record a Participant’s deferral amounts under Section 5.1 of the 2005 Plan, plus or minus any investment gain or loss allocable thereto under Section 5.4 of the 2005 Plan.

2.8“Directors’ Fees” means the fees that are paid by the Company to members of the Board as compensation for services performed by them as members of the Board.

2.9“Enrollment Form” means the agreement to participate and related elections filed by a Participant pursuant to Section 5.1 of the 2005 Plan, in the form prescribed by the Committee,

3

directing the Company to reduce the amount of Directors’ Fees otherwise currently payable to the Participant and credit such amount to the Participant’s Deferral Account hereunder.

2.10“Hardship Withdrawal” shall have the meaning set forth in Section 6.3 of the 2005 Plan.

2.11“Investment Options” means the investment options described in Exhibit A to the 2005 Plan into which a Participant may direct all or part of his or her Deferral Account.

2.12“Investment Return Rate” means:

(a)In the case of an Investment Option named in Exhibit A of a fixed income nature, the interest deemed to be credited as determined in accordance with the procedures applicable to the same investment option provided under the Equitable Resources, Inc. Employee Savings Plan, originally adopted September 1, 1985, as amended (“Equitable 401(k) Plan”);

(b)In the case of a Investment Option named in Exhibit A of an equity investment nature, the increase or decrease in deemed value and any dividends deemed to be credited as determined in accordance with the procedures applicable to the same investment option provided under the Equitable 401(k) Plan; or

(c)In the case of the Equitable Resources Common Stock Fund, the increase or decrease in the deemed value, and the reinvestment in the Equitable Resources Common Stock Fund of any dividends deemed to be credited, as determined in accordance with the procedures applicable to investments in the Equitable Resources Common Stock Fund under the Equitable 401(k) Plan.

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2.13“Irrevocable Trust” means a grantor trust that may be established prior to the occurrence of a Change in Control of the Company to assist the Company in fulfilling its obligations under this 2005 Plan but which shall be established by the Company in the event of a Change in Control of the Company. All amounts held in such Irrevocable Trust shall remain subject to the claims of the general creditors of the Company and Participants in this 2005 Plan shall have no greater rights to any amounts held in any such Irrevocable Trust than any other unsecured general creditor of the Company.

2.14“Participant” means any non-employee member of the Board (i) who receives an award of Phantom Stock under the NEDSIP and/or (ii) who elects to participate in the 2005 Plan for purposes of deferring his or her Directors’ Fees by filing an Enrollment Form with the Committee pursuant to Section 5.1 of the 2005 Plan.

2.15“Phantom Stock” means those shares of the common stock or stock units of the Company:

(i)awarded pursuant to the NEDSIP, and

(ii)which will be distributed to eligible 2005 Plan Participants in the form elected by the 2005 Plan Participant and on the date specified in the Phantom Stock Agreement, which date is deemed to be incorporated by reference herein.

2.16“Phantom Stock Account” means the recordkeeping account established on the books and records of the Company to record the number of shares of Phantom Stock allocated to a Participant under the 2005 Plan.

2.17“Phantom Stock Agreement” means any agreements and/or terms of award of Phantom Stock under the NEDSIP pursuant to which Phantom Stock is or may be payable.

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2.18“2005 Plan” means this Equitable Resources, Inc. 2005 Directors’ Deferred Compensation Plan, as amended from time to time.

2.19“Plan Year” means the twelve-month period commencing each January 1 and ending on December 31.

2.20“Valuation Date” means the last day of each calendar quarter and any other date determined by the Committee or specified herein.

ARTICLE III

ELIGIBILITY AND PARTICIPATION

3.1Eligibility for Phantom Stock Account.

Eligibility to participate in the 2005 Plan for purposes of the Phantom Stock Account under Article IV of the 2005 Plan is limited to those non-employee members of the Board who receive Phantom Stock pursuant to the terms of the NEDSIP. An eligible Board member shall commence participation in the 2005 Plan for purposes of the Phantom Stock Account on the date on which an award of Phantom Stock is made pursuant to the terms of the NEDSIP.

3.2Eligibility for Deferral Account.

Eligibility to participate in the 2005 Plan for purposes of deferring Directors’ Fees under Section 5.1 of the 2005 Plan is limited to non-employee members of the Board. An eligible Board member shall commence participation in the 2005 Plan for purposes of deferring Directors’ Fees as of the first day of the Plan Year following the receipt of his or her Enrollment Form by the Committee in the preceding calendar year or within 30 days of becoming a Participant if such date occurs after the commencement of the Plan Year.

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3.3Ineligible Participant.

Notwithstanding any other provisions of this 2005 Plan to the contrary, if the Committee determines that the participation in the 2005 Plan by any Board member will jeopardize the status of the 2005 Plan as exempt from the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or regulations thereunder, the Committee may, in its sole discretion, determine that such Participant shall cease to be eligible to participate in the 2005 Plan.

ARTICLE IV

PHANTOM STOCK ACCOUNT

4.1Phantom Stock Award.

As of the date of any Phantom Stock award pursuant to the terms of the NEDSIP, the Phantom Stock Account of a Participant eligible for such award shall be credited with the number of Phantom Stock units as specified in such award. The Company shall not be required to contribute any shares or other property to the Irrevocable Trust for such awards.

4.2Valuation of Phantom Stock Account; Deemed Reinvestment of Dividends

As of each Valuation Date, the value of a Participant’s Phantom Stock Account shall equal (i) the value of the number of shares of Phantom Stock credited to such account as of the last Valuation Date, plus (ii) the value of the number of shares of Phantom Stock deemed to have been credited to such account as a result of the deemed reinvestment of any dividends deemed to have been paid on such Phantom Stock since the last Valuation Date. Any dividends paid on the common stock of the Company shall be deemed to be paid on the Phantom Stock under the 2005 Plan in an equal amount; provided, however, that to the extent they are paid in a form other than additional shares of the common stock of the Company, they shall be deemed to be immediately reinvested in such number of shares of the common stock of the Company as are represented by

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the aggregate amount of the dividends divided by the value of one share of the common stock of the Company on the date the dividend is paid.

For purposes of this 2005 Plan, the “value” of a share of Phantom Stock shall be deemed to equal the closing price of a share of Company common stock as listed on the New York Stock Exchange (“NYSE”) on any date of reference. In the event that the date of reference is a date on which the NYSE is not open for business, the value of a share of Phantom Stock shall equal the average of the closing prices on the dates immediately preceding and following the date of reference during which the NYSE was open for business. Notwithstanding anything in this 2005 Plan to the contrary, the Company may adopt alternate procedures for determining the value of Phantom Stock in the event Company common stock ceases to be traded on the NYSE or to reflect the occurrence of a Conversion Event described in Section 4.3.

For purposes of determining the value of the Phantom Stock credited to a Participant’s Phantom Stock Account as of any time of reference, each share of Phantom Stock shall be deemed equivalent in value to one share of the outstanding shares of common stock of the Company. For purposes of valuing a Participant’s Phantom Stock Account upon the termination of his or her membership on the Board, the Valuation Date shall be the business day coincident with the termination of the Participant’s Board membership.

4.3Adjustment and Substitution of Phantom Stock

In the event of:  (a) a stock split (or reverse stock split) with respect to the common stock of the Company; (b) the conversion of the common stock of the Company into another form of security or debt instrument of the Company; (c) the reorganization, merger or consolidation of the Company into or with another person or entity; or (d) any other action which would alter the number of, and/or shareholder rights of, holders of outstanding shares of the common stock of the Company (collectively, a “Conversion Event”), then, notwithstanding the fact that 2005 Plan Participants have no rights to the shares of Company common stock represented by their

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Phantom Stock Account nor to the shares of such Company common stock which may be contributed by the Company to the Irrevocable Trust, the number of shares of Phantom Stock then allocated to a Participant’s Phantom Stock Account shall be deemed to be converted, to the extent possible, to reflect any such Conversion Event to the same extent as the shares of holders of outstanding shares of Company common stock would have been converted upon the occurrence of the Conversion Event. On and after any such Conversion Event, this 2005 Plan shall be applied, mutatis mutandis, as if the Participant’s Phantom Stock Account was comprised of the cash, securities, notes or other instruments into which the outstanding shares of Company common stock was converted. Following the occurrence of a Conversion Event, the Board is authorized to amend the 2005 Plan as it, in its sole discretion, determines to be necessary or appropriate to address any administrative or operational details presented by the Conversion Event which are not addressed in the 2005 Plan.

4.4Shareholder Rights.

Except as specifically provided herein, an award of Phantom Stock under the 2005 Plan shall not entitle a Participant to voting rights or any other rights of a shareholder of the Company.

4.5Statement of Phantom Stock Account.

As soon as administratively feasible following the last day of each calendar quarter, the Committee shall provide to each eligible Participant a statement of the value of his or her Phantom Stock Account as of the most recent Valuation Date.

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ARTICLE V

DEFERRAL ACCOUNT

5.1Deferral of Directors’ Fees.

Any non-employee member of the Board may elect to defer a specified percentage of his or her Directors’ Fees under the 2005 Plan by submitting to the Committee a written Enrollment Form. Such election shall be effective with respect to Directors’ Fees paid for services performed by such Participant beginning the first day of the Plan Year following the receipt by the Committee of the Participant’s Enrollment Form in the preceding calendar year and shall remain in effect for the Plan Year. A Participant may not withdraw his or her Enrollment Form during the Plan Year.

5.2Investment Direction.

A Participant may direct that amounts deferred pursuant to his or her Enrollment Form be deemed to be invested in one or more of the Investment Options listed in Exhibit A to the 2005 Plan (a “New Money Election”) and credited with shares or units in each such Investment Option in the same manner as equivalent contributions would be invested under the same Investment Options available under the Equitable 401(k) Plan. Except as otherwise provided with respect to directions to invest in the Equitable Resources Common Stock Fund (“Company Stock Fund”), a Participant may direct that amounts previously credited to his or her Deferral Account and deemed invested in the available Investment Options be transferred between and among the then available Investment Options (a “Reallocation Election”).

Special rules apply to directions to invest in the Company Stock Fund. No restrictions are placed on New Money Elections. Accordingly, a Participant may make a New Money Election to invest in the Company Stock Fund or to cease future investments in such Fund in the same manner as any other Investment Option. Reallocation Elections, however, may not direct that

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amounts previously credited to a Participant’s Deferral Account and which were directed to be invested in the Company Stock Fund be transferred out of such Fund and into another Investment Option.

Reallocation Elections into the Company Stock Fund are permitted. Accordingly, no restrictions apply to Reallocation Elections directing that amounts previously credited to a Participant’s Deferral Account and which were directed to be invested in an Investment Option other than the Company Stock Fund be transferred out of such other Investment Option and into the Company Stock Fund.

Except as otherwise provided with respect to the Company common stock, regardless of whether the investment direction is a New Money Election or a Reallocation Election, a Participant’s Deferral Account shall only be deemed to be invested in such Investment Options for purposes of crediting investment gain or loss under Section 5.4 of the 2005 Plan and the Company shall not be required to actually invest, on behalf of any Participant, in any Investment Option listed on Exhibit A to the 2005 Plan. Notwithstanding the preceding sentence, the Company may, but shall not be required to, elect to make contributions to an Irrevocable Trust in an amount equal to the amounts deferred by Participants and actually invest such contributions in the Investment Options elected by a particular Participant; provided, however, that the Company shall contribute shares of Company common stock to the Irrevocable Trust in an amount equal to the aggregate number of shares of Company common stock represented by Participant investment directions to the Company Stock Fund. Any such contributions to an Irrevocable Trust and related investments shall be solely to assist the Company in satisfying its obligations under this 2005 Plan and no Participant shall have any right, title or interest whatsoever in any such contributions or investments.

All investment elections shall be made by written notice to the Committee in accordance with uniform procedures established by the Committee; provided, however, that investment directions

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to an Investment Option must be in multiples of whole percents (1%) or whole dollars ($1.00). Any such investment election shall be effective as of the Valuation Date immediately following the date on which the written notice is received and shall remain in effect until changed by the Participant. In the event that a Participant fails to direct the investment of his or her account, the Committee shall direct such Participant’s Deferral Account to an Investment Option named in Exhibit A of a fixed income nature.

5.3No Right to Investment Options.

Notwithstanding anything in the 2005 Plan to the contrary, the Investment Options offered under the 2005 Plan may be changed or eliminated at any time in the sole discretion of the Benefits Investment Committee of the Company. Prior to the change or elimination of any Investment Option under the 2005 Plan, the Committee shall provide written notice to each Participant with respect to whom a Deferral Account is maintained under the 2005 Plan and any Participant who has directed any part of his or her Deferral Account to such Investment Option shall be permitted to redirect such portion of his or her Deferral Account to another Investment Option offered under the 2005 Plan.

5.4Crediting of Investment Return.

Each Participant’s Deferral Account shall be credited with deemed investment gain or loss at the Investment Return Rate as of each Valuation Date, based on the average daily balance of the Participant’s Deferral Account since the immediately preceding Valuation Date, but after such Deferral Account has been adjusted for any contributions or distributions to be credited or deducted for such period. Until a Participant or his or her Beneficiary receives his or her entire Deferral Account, the unpaid balance thereof shall be credited with investment gain or loss at the Investment Return Rate, as provided in this Section 5.4 of the 2005 Plan.

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5.5Valuation of Deferral Account.

As of each Valuation Date, a Participant’s Deferral Account shall equal (i) the balance of the Participant’s Deferral Account as of the immediately preceding Valuation Date, plus (ii) the Participant’s deferred Directors’ Fees since the immediately preceding Valuation Date, plus or minus (iii) investment gain or loss credited as of such Valuation Date pursuant to Section 5.4 of the 2005 Plan, and minus (iv) the aggregate amount of distributions, if any, made from such Deferral Account since the immediately preceding Valuation Date. For purposes of valuing a Participant’s Deferral Account upon the termination of the Participant’s membership on the Board, the Valuation Date shall be the business day coinciding with the date of the termination of the Participant’s Board membership.

5.6Statement of Deferral Account.

As soon as administratively feasible following the last day of each calendar quarter, the Committee shall provide to each Participant a statement of the value of his or her Deferral Account as of the most recent Valuation Date.

ARTICLE VI

PAYMENT OF BENEFITS

6.1Payment of Phantom Stock Account.

On the date provided for payment pursuant to the terms of a Phantom Stock Agreement, which date is deemed to be incorporated by reference herein, the Company shall pay or distribute to the Participant or, in the event of the Participant’s death, to his Beneficiary, either an amount equal to the value of the Participant’s Phantom Stock Account then payable, or the number of shares of Company common stock then payable, whichever form is elected by the Participant if so provided in the award, based on awards credited to the Participant’s Phantom Stock Account

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pursuant to Section 4.1 of the 2005 Plan, as determined in accordance with Article IV of the 2005 Plan, less any income tax withholding required under applicable law.

6.2Payment of Deferral Account.

Thirty (30) days following a Participant’s termination of membership on the Board and in accordance with the election provided in Section 6.4 of the 2005 Plan, and without regard to whether the Participant is entitled to payment of his or her Phantom Stock Account, the Company shall pay to the Participant or, in the event of the Participant’s death, to his Beneficiary, an amount equal to thevalue of the Participant’s Deferral Account, as determined in accordance with Article V of the 2005 Plan, less any income tax withholding required under applicable law. Except as otherwise provided in the following sentence, such payment shall be made in cash in the form elected by the Participant pursuant to Section 6.4 of the 2005 Plan. Notwithstanding the preceding sentence, to the extent the Participant had directed that any portion of his Deferral Account be invested in the Company Stock Fund, the Company shall distribute such portion in such number of shares of Equitable Resources Common Stock as would be represented by an equal amount invested in the Company Stock Fund under the Company 401(k) Plan.

6.3Hardship Withdrawal from Deferral Account.

In the event that the Committee, in its sole discretion, determines upon the written request of a Participant in accordance with uniform procedures established from time to time by the Committee, that the Participant has suffered an unforeseeable emergency, the Company may pay to the Participant in a lump sum as soon as administratively feasible following such determination, an amount necessary to meet the emergency, but not exceeding the aggregate balance of such Participant’s Deferral Account as of the date of such payment (a “Hardship Withdrawal”). Any such Hardship Withdrawal shall be subject to any income tax withholding required under applicable law. The Participant shall provide to the Committee such evidence as

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the Committee may require to demonstrate that such emergency exists and financial hardship would occur if the withdrawal were not permitted.

For purposes of this Section 6.3, an “unforeseeable emergency” shall mean a severe financial hardship to the Participant or Beneficiary resulting from an illness or accident of the Participant or Beneficiary, the Participant’s or Beneficiary’s spouse, or the Participant’s or Beneficiary’s dependent (as defined in Section 152(a) of the Code), loss of the Participant’s or Beneficiary’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary. The amount of a Hardship Withdrawal may not exceed the amount the Committee reasonably determines to be necessary to meet such emergency needs (including taxes incurred by reason of a taxable distribution) after taking into account the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by the cessation of future deferrals under the 2005 Plan.

The form of payment of the Hardship Withdrawal shall be a lump sum cash payment. For purposes of reducing a Participant’s Deferral Account and adjusting the balances in the various Investment Options in which such reduced Deferral Account is deemed to be invested to reflect such Hardship Withdrawal, amounts represented by such Hardship Withdrawal shall be deemed to have been withdrawn first, on a pro rata basis, from that portion of his Deferral Account deemed to be invested in Investment Options other than the Equitable Common Stock Fund (the “Non Stock Investments”) and, second, to the extent the Hardship Withdrawal cannot be fully satisfied by a deemed withdrawal of the Non Stock Investments, from the portion deemed invested in the Company Stock Fund.

Notwithstanding the preceding, to the extent the Participant had directed that any portion of his Deferral Account be invested in the Company Stock Fund, the Company shall distribute such

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portion in such number of shares of Equitable Resources Common Stock based on the value at the date of distribution.

6.4Form of Payment.

(a)In General. A Participant may elect to receive that portion of his or her Account payable hereunder in one of the following forms:

(i)Annual payments of a fixed amount which shall amortize the value of the Account over a period of five, ten, or fifteen years (together, in the case of each annual payment, with interest and dividends credited thereto after the payment commencement date pursuant to Section 5.4 of the 2005 Plan); or

(ii)A lump sum.

Such an election must be made in writing in accordance with uniform procedures established by the Committee at the time of filing the Enrollment Form with respect to the Plan Year. In the event a Participant fails to make a distribution election within the time period prescribed, his or her Account shall be distributed in the form of a lump sum. Payment of the Deferral Account may not, in any event, commence earlier than (i) separation from service, (ii) disability, as defined in Section 409A of the Code and the regulations thereunder, or (iii) death.

(b)Distribution of Company Common Stock. In the event the Company is required to distribute some or all of a Participant’s Account in shares of Equitable Resources Common Stock in accordance with 2005 Plan Sections 6.1 and/or 6.2, the aggregate amount of such shares shall be distributed in the same manner as the Participant elected in subsection (a). To the extent the Participant elected an installment form of payment, the number of shares of Equitable Common Stock to be distributed in each installment shall be determined by multiplying (i) the aggregate number of shares of Equitable Resources Common Stock deemed credited to the Participant’s Account as of the installment payment date by (ii) a fraction, the numerator of which is one and

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the denominator of which is the number of unpaid installments, and by rounding the resulting number down to the next whole number.

6.5Payments to Beneficiaries.

In the event of a Participant’s death prior to the Participant’s termination of membership on the Board, the Participant’s Beneficiary shall receive payment of the Phantom Stock Account (if any) in the form provided in the Phantom Stock Agreement and/or Participant’s Deferral Account ninety (90) days following the Participant’s death in the form elected by the Participant pursuant to Section 6.4 of the 2005 Plan, less any income tax withholding required under applicable law. If no such election was made by the Participant, the Participant’s Beneficiary shall receive payment of the Participant’s Account in the form of a lump sum. In the event of the Participant’s death after commencement of installment payments under the 2005 Plan, but prior to receipt of his or her entire Account, the Participant’s Beneficiary shall receive the remaining installment payments at such times as such installments would have been paid to the Participant until the Participant’s entire Account is paid.

6.6Limited Account Size; Lump Sum Payment.

In the event that the value of a Participant’s Account is not greater than $10,000 as of the Valuation Date immediately preceding the commencement of payment to the Participant under the 2005 Plan (or such other amount permitted by law to be distributed), or the balance of the Participant’s Account payable to any Beneficiary is not greater than $10,000 as of the Valuation Date immediately preceding the commencement of payment to the Participant’s Beneficiary under the 2005 Plan (or such other amount permitted by law to be distributed), the Committee may inform the Company and the Company, in its discretion, may choose to pay the benefit in the form of a lump sum, notwithstanding any provision of the 2005 Plan or an election of a Participant under Section 6.4 of the 2005 Plan to the contrary, provided that the requirements of

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Prop. Treas. Reg. §1.409A-3(h)(2)(iv), or any successor regulation, are also satisfied with respect to such payment.

ARTICLE VII

BENEFICIARY DESIGNATION

7.1Beneficiary Designation.

Each Participant shall have the sole right, at any time, to designate any person or persons as his or her Beneficiary to whom payment may be made of any amounts which may become payable in the event of his or her death prior to the complete distribution to the Participant of his or her Account. Any Beneficiary designation shall be made in writing in accordance with uniform procedures established by the Committee. A Participant’s most recent Beneficiary designation shall supersede all prior Beneficiary designations. In the event a Participant does not designate a Beneficiary under the 2005 Plan, any payments due under the 2005 Plan shall be made first to the Participant’s spouse; if no spouse, then in equal amounts to the Participant’s children; if no children, then to the Participant’s estate.

ARTICLE VIII

ADMINISTRATION

8.1Committee.

The Committee shall have sole discretion to:  (i) designate non-employee directors eligible to participate in the 2005 Plan; (ii) interpret the provisions of the 2005 Plan; (iii) supervise the administration and operation of the 2005 Plan; and (iv) adopt rules and procedures governing the 2005 Plan.

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8.2Investments.

The Benefits Investment Committee of the Company shall have the sole discretion to choose the Investment Options available under the 2005 Plan and to change or eliminate such Investment Options, from time to time, as it deems appropriate.

8.3Agents.

The Committee may delegate its administrative duties under the 2005 Plan to one or more individuals, who may or may not be employees of the Company.

8.4Binding Effect of Decisions.

Any decision or action of the Committee with respect to any question arising out of or in connection with the eligibility, participation, administration, interpretation, and application of the 2005 Plan shall be final and binding upon all persons having any interest in the 2005 Plan.

8.5Indemnification of Committees.

The Company shall indemnify and hold harmless the members of the Committee and the Benefits Investment Committee and their duly appointed agents under Section 8.3 against any and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to the 2005 Plan, except in the case of gross negligence or willful misconduct by any such member or agent of the Committee or Benefits Investment Committee.

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ARTICLE IX

AMENDMENT AND TERMINATION OF PLAN

9.1Amendment.

The Company (or its delegate) may at any time, or from time to time, modify or amend any or all of the provisions of the 2005 Plan. Where the action is to be taken by the Company, it shall be accomplished by written action of the Board at a meeting duly called at which a quorum is present and acting throughout. Where the action is to be taken by a delegate of the Company, it shall be accomplished pursuant to any procedures established in the instrument delegating the authority. Regardless of whether the action is taken by the Company or its delegate, no such modification or amendment shall have the effect of reducing the value of any Participant’s Account under the 2005 Plan as it existed as of the day before the effective date of such modification or amendment, without such Participant’s prior written consent. Written notice of any modification or amendment to the 2005 Plan shall be provided to each Participant under the 2005 Plan.

9.2Termination.

The Company, in its sole discretion, may terminate this 2005 Plan at any time and for any reason whatsoever by written action of the Board at a meeting duly called at which a quorum is present and acting throughout; provided that such termination shall not have the effect of reducing the value of any Participant’s Account under the 2005 Plan as it existed on the day before the effective date of the termination of the 2005 Plan without such Participant’s prior written consent. The Valuation Date for purposes of determining the value of Participants’ Accounts upon termination of the 2005 Plan shall be the date prior to the date of the termination of the 2005 Plan.

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ARTICLE X

MISCELLANEOUS

10.1Funding.

The Company’s obligation to pay benefits under the 2005 Plan shall be merely an unfunded and unsecured promise of the Company to pay money in the future. Except as otherwise provided in Section 5.2, prior to the occurrence of a Change in Control, the Company, in its sole discretion, may elect to make contributions to an Irrevocable Trust to assist the Company in satisfying all or any portion of its obligations under the 2005 Plan. Regardless of whether the Company elects to or otherwise contributes to an Irrevocable Trust, 2005 Plan Participants, their Beneficiaries, and their heirs, successors and assigns, shall have no secured interest or right, title or claim in any property or assets of the Company.

Notwithstanding the foregoing, upon the occurrence of an event resulting in a Change in Control, the Company shall make a contribution to an Irrevocable Trust in an amount which, when added to the then value of any amounts previously contributed to an Irrevocable Trust to assist the Company in satisfying all or any portion of its obligations under the 2005 Plan, shall be sufficient to bring the total value of assets held in the Irrevocable Trust to an amount not less than the total value of all Participants’ Accounts under the 2005 Plan as of the Valuation Date immediately preceding the Change in Control; provided that any such funds contributed to an Irrevocable Trust pursuant to this Section 10.1 shall remain subject to the claims of the Company’s general creditors and provided, further, that such contribution shall reflect any Conversion Event described in Section 4.3. Upon the occurrence of the Change in Control of the Company, all deferrals to the 2005 Plan shall cease, any adjustments required by Section 4.3 shall be made and the Company shall provide to the trustee of the Irrevocable Trust all 2005 Plan records and other information necessary for the trustee to make payments to Participants under the 2005 Plan in accordance with the terms of the 2005 Plan.

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10.2Nonassignability.

No right or interest of a Participant or Beneficiary under the 2005 Plan may be assigned, transferred, or subjected to alienation, anticipation, sale, pledge, encumbrance or other legal process or in any manner be liable for or subject to the debts or liabilities of any such Participant or Beneficiary, or any other person.

10.3Legal Fees and Expenses.

It is the intent of the Company that no Participant be required to incur the expenses associated with the enforcement of his or her rights under this 2005 Plan by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Participant hereunder. Accordingly, if after a Change in Control it should appear that the Company has failed to comply with any of its obligations under this 2005 Plan, or in the event that the Company or any other person takes any action to declare this 2005 Plan void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Participant the benefits intended to be provided to such Participant hereunder, the Company irrevocably authorizes such Participant to retain counsel of his or her choice, at the expense of the Company as hereafter provided, to represent such Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, stockholder or other person affiliated with the Company in any jurisdiction. The Company shall pay and be solely responsible for any and all attorneys’ and related fees and expenses incurred by such Participant as a result of the Company’s failure to perform under this 2005 Plan or any provision thereof; or as a result of the Company or any person contesting the validity or enforceability of this 2005 Plan or any provision thereof.

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10.4No Acceleration of Benefits.

Notwithstanding anything to the contrary herein, there shall be no acceleration of the time or schedule of any payments under the 2005 Plan, except as may be provided in regulations under Section 409(A) of the Code.

10.5Captions.

The captions contained herein are for convenience only and shall not control or affect the meaning or construction hereof.

10.6Governing Law.

The provisions of the 2005 Plan shall be construed and interpreted according to the laws of the Commonwealth of Pennsylvania.

10.7Successors.

The provisions of the 2005 Plan shall bind and inure to the benefit of the Company, its affiliates, and their respective successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Company or a participating affiliate and successors of any such corporation or other business entity.

10.8No Right to Continued Service.

Nothing contained herein shall be construed to confer upon any Participant the right to continue to serve as a member of the Board or in any other capacity.

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EX-10.11(G)

Exhibit 10.11(g)

SATISFACTION AGREEMENT

IN RESPECT OF

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

This Satisfaction of Supplemental Executive Retirement Agreement (this “Satisfaction Agreement”), dated as of February 22, 2006, relating to that certain Supplemental Executive Retirement Agreement dated May 4, 1998 (the “Retirement Agreement”) by and between Equitable Resources, Inc., a Pennsylvania corporation (the “Company”), and Murry S. Gerber, an individual (the “Executive”);

WITNESSETH:

WHEREAS, the Retirement Agreement was entered into upon Executive’s commencement of employment with the Company and for the purpose of making up the difference, if any, between the $211,500 per year early retirement benefit to which the Executive would have been entitled from his prior employer and the retirement benefit to which he is entitled under the Equitable Resources, Inc. Employee Savings Plan and the Equitable Resources, Inc. Deferred Compensation Plan (as in effect on December 31, 2004, the “Employee Deferred Compensation Plan”);

WHEREAS, the Board of Directors of the Company terminated, and/or terminated participation in, the Employee Deferred Compensation Plan and the Equitable Resources, Inc. 2005 Employee Deferred Compensation Plan (collectively, the “Deferred Compensation Plans”) in 2005, and the Executive received a payout of his interests therein on December 30, 2005 (collectively, the “Deferred Compensation Payout”); and

WHEREAS, in recognition of the Deferred Compensation Payout, the parties hereto desire to recognize the satisfaction by the Company of its obligations under the Retirement Agreement;

NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Company and the Executive agree as follows:

1.The parties hereto confirm that the Company has satisfied in full all of its obligations under the Retirement Agreement through termination of the Deferred Compensation Plans and agree that in accordance with Section 17 thereof the Retirement Agreement terminated, by its own terms, immediately upon the Executive’s receipt of the Deferred Compensation Payout and is of no further force or effect.

2.This Satisfaction Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania.

IN WITNESS WHEREOF, the parties hereto have executed this Satisfaction Agreement as of the date first above set forth.

EQUITABLE RESOURCES, INC.:
By:	/s/ Charlene Petrelli
Name:			Charlene Petrelli
Title:		Vice President, Human Resources
/s/ Murry S. Gerber
Murry S. Gerber

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EX-10.16

Exhibit 10.16

DIRECTORS’ COMPENSATION AND RETIREMENT PROGRAM

In April 2005, a compensation consultant reviewed the total compensation for directors. Specifically, retainer fees, meeting fees, insurance and stock-based long-term incentives were reviewed using, as the competitive benchmark, levels of total compensation paid to directors of the 30 energy companies (29 of which constitute the peer group used for the company’s executive performance incentive program), 20 general industry companies of comparable revenue and capitalization size and 14 companies located in the company’s geographic area or of other relevance. Set forth below is the compensation for non-employee directors. No compensation is paid to employee directors for their service as directors.

Cash Compensation

•An annual cash retainer of $24,000 is paid to non-employee directors on a quarterly basis. This level of retainer was found to be competitive and no changes were made in 2005 to this compensation component.

•The cash meeting fee is $1,500 for each Board and Committee meeting attended. If a non-employee director participates in a meeting by telephone, the meeting fee is $750. An additional $1,000 is paid to the Audit Committee Chair and $500 is paid to each other Committee Chair, for each Committee meeting attended.

•The company reimburses directors for their travel and related expenses in connection with attending Board meetings and Board-related activities. The company also provides non-employee directors with $20,000 of life insurance and $250,000 of travel accident insurance while traveling on business for Equitable Resources.

Equity-Based Compensation

•The stock option award under the 1999 Non-Employee Directors’ Stock Incentive Plan that was historically granted to non-employee directors on an annual basis was replaced in 2003 by a grant of stock units which vested upon award and was payable on a deferred basis under the Directors’ Deferred Compensation Plan. Similarly, in 2005, a grant of 2,000 deferred stock units was awarded to each non-employee director which vested upon award. Each deferred stock unit is equal in value to one share of company common stock, but does not have voting rights. Dividends are credited quarterly in the form of additional stock units. The value of the stock units will be paid in cash on the earlier of the director’s death or termination of service as a director. The number of stock units, options, or other stock-based awards granted in future years will be based on competitive practices as benchmarked by a nationally recognized compensation consultant.

•The non-employee directors are subject to stock ownership guidelines which require them to hold shares (or share equivalents, including deferred stock units) of a value equal to at least two times the annual cash retainer. Under the guidelines, directors have up to two years to acquire a sufficient number of shares (or share equivalents, including deferred stock units) to meet this requirement. All of the company’s non-employee directors meet this share ownership requirement.

Deferred Compensation

•The company has a deferred compensation plan for non-employee directors. In addition to the automatic deferral of stock units awarded, non-employee directors may elect to defer up to 100% of their annual retainer and fees into the 2005 Directors’ Deferred Compensation Plan and receive an investment return on the deferred funds as if the funds were invested in company stock or permitted mutual funds. Prior to the deferral, plan participants must irrevocably elect to receive the deferred funds either in a lump sum or in equal installments. The first distribution date will be 30 days following termination of service as a director. This deferred compensation is an unsecured obligation of the company. Ms. Jeremiah and Mr. Miles participated in the deferred compensation plan with

respect to fees for 2005, and they and other directors have participated in prior years. The prior Directors’ Deferred Compensation Plan continues to operate for the sole purpose of administering amounts vested under the plan on or prior to December 31, 2004.

•In May 1999, the directors’ retirement plan was curtailed and the accrued benefit of each active director was converted to a phantom stock account administered under the Directors’ Deferred Compensation Plan. Imputed dividends are credited to the account as additional shares. All participants are vested upon death or termination of service as a director. Dr. Domm and Messrs. McConomy, Rohr and Shapira are the only active directors eligible for benefits under the retirement plan, which are distributable (in stock) upon death or termination of service as a director. Directors elected after May 1999 are not eligible to participate in the retirement plan.

Charitable Award

•Non-employee directors who joined the Board prior to May 25, 1999 may designate a civic, charitable or educational organization as beneficiary of a $500,000 gift funded by a life insurance policy purchased by Equitable Resources. The directors do not receive any financial benefit from this program because the charitable deductions accrue solely to the company.

Matching Gifts

•To further the company’s support for charitable giving, non-employee directors are able to participate in the Matching Gifts Program of the Equitable Resources Foundation, Inc. (the “Equitable Foundation”) on the same terms as all company employees. Under this program, the Equitable Foundation will match gifts of at least $100 made by the director to approved charities, up to an aggregate total of $10,000 in any calendar year.

EX-10.17(B)

Exhibit 10.17 (b)

NONCOMPETE AGREEMENT

This Agreement is made as of December 1, 1999 by and between Equitable Resources, Inc., a Pennsylvania corporation (Equitable Resources, Inc, and its majority-owned subsidiaries are hereinafter collectively referred to as the “Company”), and Randall L. Crawford (the “Employee”).

WITNESSETH:

WHEREAS, in order to protect the business and goodwill of the Company, the Company desires to obtain certain non-competition covenants from the Employee and the Employee desires to agree to such covenants in exchange for the Company’s agreement to pay certain severance benefits in the event that the Employee’s employment with the Company is terminated in certain events; and

WHEREAS, the Employee is willing to enter into this Agreement, which contains, among other things, specific non-competition agreements, in consideration of the simultaneous execution by the Company and the Employee of a new Change of Control Agreement (the “Change of Control Agreement”), which enhances and clarifies in certain respects the benefits that the Company will pay to the Employee if the Employee’s employment with the Company is terminated in certain events following a charge of control of the Company.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.             If the employment of the Employee with the Company is terminated by the Company for any reason other than Cause (as defined below) or if the Employee terminates his or heremployment with the Company for Good Reason (as defined below), the Company shall pay the Employee, from the date of termination, in addition to any payments to which the Employee is entitled under the Company’s severance pay plan, twelve (12) months of base salary at the Employee’s annual base salary level in effect at the time of such termination or immediately prior to the salary reduction that serves as the basis for termination for Good Reason. Employee will also be entitled to twelve (12) months of health benefits continuation and outplacement assistance for a period not to exceed six (6) months. Such base salary amount shall be paid by the Company to the Employee in one lump sum payable within thirty (30) days after the Employee’s termination or resignation hereunder. Solely for purposes of this Agreement, “Cause” shall mean (i) a conviction of a felony, a crime of moral turpitude or fraud, (ii) the Employee’s willful and continuous engagement in conduct which is demonstrably and materially injurious to the Company, or (iii) the willful and continued refusal by the Employee to perform the duties of his or her position in a reasonable manner for thirty (30) days after written notice is given to the Employee by the Company specifying in reasonable detail the nature of the deficiency in the Employee’s performance. Solely for purposes of this Agreement, termination for “Good Reason” shall mean termination of employment by the Employee within ninety (90) days after (i) being demoted, or (ii) being given notice of a reduction in his or her annual base salary (other than a reduction of not more than 10% applicable to all senior officers of the Company).

2.             While the Employee is employed by the Company and for a period of six (6) months after date of Employee’s termination of employment with Company for any reason,

the Employee shall not (i) directly or indirectly engage, whether as an employee, consultant, partner, owner, agent, stockholder, officer, director or otherwise, alone or in association with any other person or entity, in (A) the oil or natural gas transmission and distribution business anywhere in the United States east of the Rocky Mountains except that the restriction as to the regulated distribution of oil and natural gas shall be limited to the markets in which the Company conducted such business or contemplated (with the Employee’s knowledge) conducting such business at the time of the termination of Employee’s employment, or (B) any business activity that competes with any project or proposed project which was discussed by or with the Employee in the course of his or her employment with the Company or any project or proposed project with respect to which the Company initiated any business activity during the course of his or her employment (for purposes of this subsection (i) employment or engagement by a customer of the Company to provide or manage services that are provided by the Company shall be deemed to violate this subsection (i)); (ii) directly or indirectly on his or her own behalf or on behalf of any other person or entity contact (A) any customer of the Company with whom he or she had contact while employed by the Company, or (B) any person or entity to whom he or she attempted to market the Company’s products and services while employed by the Company, in either case, for the purpose of soliciting the purchase of any product or service that competes with any product or service offered by the Company or which was considered to be offered by the Company while the Employee was employed by the Company; (iii) take away or interfere, or attempt to interfere, with any custom, trade or existing contractual relations of the Company, including any business project or any contemplated business project which representatives of the Company have discussed with any potential participant in such project; or (iv) directly or indirectly on his or her own behalf or on behalf of any other person or entity solicit or induce, or cause any other person or entity to solicit or induce, or attempt to induce, any employee or consultant to leave the employ of or engagement by the Company or its successors, assigns, or affiliates, or to violate the terms of their contracts with the Company.

3.             The Company may terminate this Agreement by giving twelve (12) months’ prior written notice to the Employee; provided that all provisions of this Agreement shall apply if any event specified in sections 1 or 2 occurs prior to the expiration of such twelve (12) month period. Notwithstanding anything in this Agreement to the contrary, this Agreement shall immediately terminate and be of no further force and effect upon the occurrence of a “Change of Control” as such term is defined in the Change of Control Agreement and neither the Company nor the Employee shall be bound by the terms of this Agreement following a Change of Control as so defined.

4.             The provisions of this Agreement are severable. To the extent that any provision of this Agreement is deemed unenforceable in any court of law the parties intend that such provision be construed by such court in a manner to make it enforceable.

5.             The Employee acknowledges and agreesthat:  (i) this Agreement is necessary for the protection of the legitimate business interests of the Company; (ii) the restrictions contained in this Agreement are reasonable; (iii) the Employee has no intention of competing with the Company within the limitations set forth above; (iv) the Employee acknowledges and warrants that Employee believes that Employee will be fully able to earn an adequate likelihood for Employee and Employee’s dependents if the covenant not to compete contained in this Agreement is enforced against the Employee; and (v) the Employee has received adequate and valuable consideration for entering into this Agreement.

6.             The Employee stipulates and agrees that any breach of this Agreement by the Employee will result in immediate and irreparable harm to the Company, the amount of which will be extremely difficult to ascertain, and that the Company could not be reasonably or adequately compensated by damages in an action at law. For these reasons, the Company shall have the right, without objection from the Employee, to obtain such preliminary, temporary or

permanent mandatory or restraining injunctions, orders or decrees as may be necessary to protect the Company against, or on account of, any breach by the Employee of the provisions of Section 2 hereof. In the event the Company obtains any such injunction, order, decree or other relief, in law or in equity, (i) the duration of any violation of Section 2 shall be added to the six (6) month restricted period specified in Section 2, and (ii) the Employee shall be responsible for reimbursing the Company for all costs associated with obtaining the relief, including reasonable attorneys’ fees and expenses and costs of suit. Such right to equitable relief is in addition to the remedies the Company may have to protect its rights at law, in equity or otherwise.

7.             This Agreement (including the covenant not to compete contained in Section 2) shall be binding upon and inure to the benefit of the successors and assigns of the Company.

8.             This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. For the purpose of any suit, action or proceeding arising out of or relating to this Agreement, Employee irrevocably consents and submits to the jurisdiction and venue of any state or federal court located in Allegheny County, Pennsylvania. Employee agrees that service of the summons and complaint and all other process which may be served in any such suit, action or proceeding may be effected by mailing by registered mail a copy of such process Employee at the addresses set forth below. Employee irrevocably waives any objection which they may now or hereafter have to the venue of any such suit, action or proceeding brought in such court and any claim that such suit, action or proceeding brought in such court has been brought in an inconvenient forum and agrees that service of process in accordance with this Section will be deemed in every respect effective and valid personal service of process upon Employee. Nothing in this Agreement will be construed to prohibit service of process by any other method permitted by law. The provisions of this Section will not limit or otherwise affect the right of the Company to institute and conduct an action in any other appropriate manner, jurisdiction or court. The Employee agrees that final judgment in such suit, action or proceeding will be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.

9.             This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written (other than the Change of Control Agreement). This Agreement may not be changed, amended, or modified, except by a written instrument signed by the parties.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers thereunto dully authorized, and the Employee has hereunto set his hand, all as of the day and year first above written.

ATTEST:	EQUITABLE RESOURCES, INC.
/s/ Jean F. Marks	By:	/s/ Gregory R. Spencer
WITNESS:	EMPLOYEE:
/s/ David J. Smith	By:	/s/ Randall L. Crawford

EX-10.18(A)

Exhibit 10.18(a)

CHANGE OF CONTROL AGREEMENT

THIS AGREEMENT (the “Agreement”) dated as of the 23rd day of October 2000 (the “Effective Date”) by and between EQUITABLE RESOURCES, INC., a Pennsylvania corporation with its principal place of business at Pittsburgh, Pennsylvania (the “Company”), and Charlene J. Gambino, an individual (the “Employee”);

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best interest of the Company and its shareholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company; that it is imperative to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Employee’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control; and that it is appropriate to provide the Employee with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Employee will be satisfied and which are competitive with those of other corporations in the industry in which the Company’s principal business activity is conducted; and

WHEREAS, in order to accomplish the foregoing objectives, the Company and the Employee desire to enter into this Agreement.

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.Term. The term of this Agreement shall commence on the Effective Date hereof and, subject to Sections 3(f), 5 and 8, shall terminate on the earlier of (i) the date of the termination of Employee’s employment by the Company for any reason prior to a Change of Control; or (ii) unless further extended as hereinafter set forth, the date which is thirty-six (36) months after the Effective Date; provided, that, commencing on the last day of the first full calendar month after the Effective Date and on the last day of each succeeding calendar month, the term of this Agreement shall be automatically extended without further action by either party (but not beyond the date of the termination of Employee’s employment prior to a Change of Control) for one (1) additional month unless one party provides written notice to the other party that such party does not wish to extend the term of this Agreement. In the event that such notice shall have been delivered, the term of this Agreement shall no longer be subject to automatic extension and the term hereof shall expire on the date which is thirty-six (36) calendar months after the last day of the month in which such written notice is received.

2.Change of Control. Change of Control shall mean any of the following events (each of such events being herein referred to as a “Change of Control”):

(a)The sale or other disposition by the Company of all or substantially all of its assets to a single purchaser or to a group of purchasers, other than to a corporation with respect to which, following such sale or disposition, more than eighty

percent (80%) of, respectively, the then outstanding shares of Company common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of the Board of Directors is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively of the outstanding Company common stock and the combined voting power of the then outstanding voting securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Company common stock and voting power immediately prior to such sale or disposition;

(b)The acquisition in one or more transactions by any person or group, directly or indirectly, of beneficial ownership of twenty percent (20%) or more of the outstanding shares of Company common stock or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of the Board of Directors; provided, however, that any acquisition by (x) the Company or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (y) any person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act (as such rule is in effect as of November 1, 1995) to file a statement on Schedule 13G with respect to its beneficial ownership of Company common stock and other voting securities, whether or not such person shall have filed a statement on Schedule 13G, unless such person shall have filed a statement on Schedule 13D with respect to beneficial ownership of fifteen percent or more of the Company’s voting securities, shall not constitute a Change of Control;

(c)The Company’s termination of its business and liquidation of its assets;

(d)There is consummated a merger, consolidation, reorganization, share exchange, or similar transaction involving the Company (including a triangular merger), in any case, unless immediately following such transaction:  (i) all or substantially all of the persons who were the beneficial owners of the outstanding common stock and outstanding voting securities of the Company immediately prior to the transaction beneficially own, directly or indirectly, more than 60% of the outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such transaction (including a corporation or other person which as a result of such transaction owns the Company or all or substantially all of the Company’s assets through one or more subsidiaries (a “Parent Company”)) in substantially the same proportion as their ownership of the common stock and other voting securities of the Company immediately prior to the consummation of the transaction, (ii) no person (other than the Company, any employee benefit plan sponsored or maintained by the Company or, if reference was made to equity ownership of any Parent Company for purposes of determining whether clause (i) above is satisfied in connection with the transaction, such Parent Company) beneficially owns, directly or indirectly, 20% or more of the outstanding shares of common stock or the combined voting power of the voting securities entitled to vote generally in the election of directors of the corporation resulting from such

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transaction and (iii) individuals who were members of the Company’s Board of Directors immediately prior to the consummation of the transaction constitute at least a majority of the members of the board of directors resulting from such transaction (or, if reference was made to equity ownership of any Parent Company for purposes of determining whether clause, (i) above is satisfied in connection with the transaction, such Parent Company); or

(e)The following individuals cease for any reasons to constitute a majority of the number of directors then serving:  individuals who, on the date hereof, constitute the entire Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved.

3.Salary and Benefits Continuation.

(a)Salary and Benefits Continuation” shall be defined to mean the following: (i) payment of an amount of cash equal to two times the Employee’s annual base salary in effect immediately prior to the Change of Control or the termination of Employee’s employment, whichever is higher; (ii) payment of an amount of cash equal to two times the highest annual incentive (bonus) payment earned by the Employee for any year in the three years prior to the termination of Employee’s employment; (iii) provision to Employee and his/her eligible dependents of medical, long-term disability, dental and life insurance coverage (to the extent such coverage was in effect immediately prior to the Change of Control) for 24  months; (iv) contribution by the Company to Employee’s account under the Company’s defined contribution retirement plan (known as the Equitable Resources, Inc. Employee Savings Plan) of an amount of cash equal to the amount that the Company would have contributed to such plan had the Employee continued to be employed by the Company for an additional 24 months at a base salary equal to the Employee’s base salary immediately prior to the Change of Control or the termination of Employee’s employment, whichever is higher, such contribution being deemed to be made immediately prior to the termination of Employee’s employment; provided, that to the extent that the amount of such contribution exceeds the amount then allowed to be contributed to the plan under the applicable rules relating to tax qualified retirement plans, then the excess shall be paid to the Employee in cash; (vii) reimbursement to Employee of reasonable costs incurred by Employee for outplacement services in the 24-month period following termination of Employee’s employment.

(b)All amounts payable by the Company to the Employee in cash pursuant to Section 3(a) shall be made in a lump sum unless the Employee otherwise elects and notifies the Company in writing prior to the termination of Employee’s

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employment of Employee’s desire to have all payments made in accordance with the Company’s regular salary and benefit payment practices, provided that (i) the lump sum payment or first payment shall be made within thirty (30) days after the Employee’s termination hereunder, and (ii) the Employee may elect to defer such payments pursuant to the Company’s then-existing deferred compensation plan(s). All other amounts payable by the Company to the Employee pursuant to Section 3 shall be paid or provided in accordance with the Company’s standard payroll and reimbursement procedures, as in effect immediately prior to the Change of Control.

(c)In the event that medical, long-term disability, dental and life insurance benefits cannot be provided under appropriate Company group insurance policies, an amount equal to the premium necessary for the Employee to purchase directly the same level of coverage in effect immediately prior to the Change of Control shall be added to the Company’s payments to Employee pursuant to Section 3(a) (payable in the manner elected by the Employee pursuant to Section 3(b)).

(d)If there is a Change of Control as defined above, the Company will provide Salary and Benefits Continuation if at any time during the first twenty-four (24) months following the Change of Control, either (i) the Company terminates the Employee’s employment other than for Cause as defined in Section 4 below or (ii) the Employee terminates his/her employment for “Good Reason” as defined below.

(e)For purposes of this Agreement, “Good Reason” is defined as:

(i)Removal of the Employee from the position he/she held immediately prior to the Change of Control (by reason other than death, disability or Cause);

(ii)The assignment to the Employee of any duties inconsistent with those performed by the Employee immediately prior to the Change of Control or a substantial alteration in the nature or status of the Employee’s responsibilities which renders the Employee’s position to be of less dignity, responsibility or scope;

(iii)A reduction by the Company in the Employee’s annual base salary as in effect on the date hereof or as the same may be increased from time to time, except for proportional across-the-board salary reductions similarly affecting all executives of the Company and all executives of any person in control of the Company, provided, however, that in no event shall the Employee’s annual base salary be reduced by an amount equal to ten percent or more of the Employee’s annual base salary as of the end of the calendar year immediately preceding the year in which the Change of Control occurs, without the Employee’s consent;

(iv)The failure to grant the Employee an annual salary increase reasonably necessary to maintain such salary as reasonably comparable to salaries of

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senior executives holding positions equivalent to the Employee’s in the industry in which the Company’s then principal business activity is conducted;

(v)The Company requiring the Employee to be based anywhere other than the Company’s principal executive offices in the city in which the Employee is principally located immediately prior to the Change of Control, except for required travel on the Company’s business to an extent substantially consistent with the Employee’s business travel obligations prior to the Change of Control;

(vi)Any material reduction by the Company of the benefits enjoyed by the Employee under any of the Company’s pension, retirement, profit sharing, savings, life insurance, medical, health and accident, disability or other employee benefit plans, programs or arrangements, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Employee of any material fringe benefits, or the failure by the Company to provide the Employee with the number of paid vacation days to which he/she is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy, provided that this paragraph (f) shall not apply to any proportional across-the-board reduction or action similarly affecting all executives of the Company and all executives of any person in control of the Company; or

(vii)The failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 15 hereof, or any other material breach by the Company of its obligations contained in this Agreement.

(f)The Employee’s right to Salary and Benefits Continuation shall accrue upon the occurrence of either of the events specified in (i) or (ii) of Section 3(d) and shall continue as provided, notwithstanding the termination or expiration of this Agreement pursuant to Section 1 hereof. The Employee’s subsequent employment, death or disability within the 24-month period following the Employee’s termination of employment in connection with a Change of Control shall not affect the Company’s obligation to continue making Salary and Benefits Continuation payments. The Employee shall not be required to mitigate the amount of any payment provided for in this Section 3 by seeking employment or otherwise. The rights to Salary and Benefits Continuation shall be in addition to whatever other benefits the Employee may be entitled to under any other agreement or compensation plan, program or arrangement of the Company; provided, that the Employee shall not be entitled to any separate or additional severance payments pursuant to the Company’s severance plan as then in effect and generally applicable to similarly situated employees. The Company shall be authorized to withhold from any payment to the Employee, his/her estate or his/her beneficiaries hereunder all such amounts, if any, that the Company may

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reasonably determine it is required to withhold pursuant to any applicable law or regulation.

4.Termination of Employee for Cause.

(a)Upon or following a Change of Control, the Company may at any time terminate the Employee’s employment for Cause. Termination of employment by the Company for “Cause” shall mean termination upon:  (i) the willful and continued failure by the Employee to substantially perform his/her duties with the Company (other than (A) any such failure resulting from Employee’s disability or (B) any such actual or anticipated failure resulting from Employee’s termination of his/her employment for Good Reason), after a written demand for substantial performance is delivered to the Employee by the Board of Directors which specifically identifies the manner in which the Board of Directors believes that the Employee has not substantially performed his/her duties, and which failure has not been cured within thirty days (30) after such written demand; or (ii) the willful and continued engaging by the Employee in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise, or (iii) the breach by the Employee of the confidentiality provision set forth in Section 8 hereof.

(b)For purposes of this Section 4, no act, or failure to act, on the Employee’s part shall be considered “willful” unless done, or omitted to be done, by the Employee in bad faith and without reasonable belief that such action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him/her a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board of Directors at a meeting of the Board of Directors called and held for that purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with his/her counsel, to be heard before the Board of Directors) finding that in the good faith opinion of the Board of Directors the Employee is guilty of the conduct set forth above in clauses (a)(i), (ii) or (iii) of this Section 4 and specifying the particulars thereof in detail.

5.Prior Termination. Anything in this Agreement to the contrary notwithstanding, if the Employee’s employment with the Company is terminated prior to the date on which a Change of Control occurs either (i) by the Company other than for Cause or (ii) by the Employee for Good Reason, and it is reasonably demonstrated by Employee that such termination of employment (a) was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control, or (b) otherwise arose in connection with or anticipation of the Change of Control, then for all purposes of this Agreement the termination shall be deemed to have occurred upon a Change of Control and the Employee will be entitled to Salary and Benefits Continuation as provided for in Section 3 hereof.

6.Employment at Will. Subject to the provisions of any other agreement between the Employee and the Company, the Employee shall remain an employee at will and nothing

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herein shall confer upon the Employee any right to continued employment and shall not affect the right of the Company to terminate the Employee for any reason not prohibited by law; provided, however, that any such removal shall be without prejudice to any rights the Employee may have to Salary and Benefits Continuation hereunder.

7.Construction of Agreement.

(a)Governing Law. This Agreement shall be governed by and construed under the laws of the Commonwealth of Pennsylvania without regard to its conflict of law provisions.

(b)Severability. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(c)Headings. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience of reference only and shall not constitute a part of this Agreement.

8.Covenant as to Confidential Information.

(a)Confidentiality of Information and Nondisclosure. The Employee acknowledges and agrees that his/her employment by the Company under this Agreement necessarily involves his/her knowledge of and access to confidential and proprietary information pertaining to the business of the Company and its subsidiaries. Accordingly, the Employee agrees that at all times during the term of this Agreement and for a period of two (2) years after the termination of the Employee’s employment hereunder, he/she will not, directly or indirectly, without the express written authority of the Company, unless directed by applicable legal authority having jurisdiction over the Employee, disclose to or use, or knowingly permit to be so disclosed or used, for the benefit of himself/herself, any person, corporation or other entity other than the Company, (i) any information concerning any financial matters,  customer relationships,  competitive status, supplier matters, internal organizational matters, current or future plans, or other business affairs of or relating to the Company and its subsidiaries, (ii) any management, operational, trade, technical or other secrets or any other proprietary information or other data of the Company or its subsidiaries, or (iii) any other information related to the Company or its subsidiaries or which the Employee subsidiaries which has not been published and is not generally known outside of the Company. The Employee acknowledges that all of the foregoing constitutes confidential and proprietary information, which is the exclusive property of the Company.

(b)Company Remedies. The Employee acknowledges and agrees that any breach of this Agreement by him/her will result in immediate irreparable harm to the Company, and that the Company cannot be reasonably or adequately

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compensated by damages in an action at law. In the event of an actual or threatened breach by the Employee of the provisions of this Section 8, the Company shall be entitled, to the extent permissible by law, immediately to cease to pay or provide the Employee or his/her dependents any compensation or benefit being, or to be, paid or provided to him pursuant to Section 3 of this Agreement, and also to obtain immediate injunctive relief restraining the Employee from conduct in breach or threatened breach of the covenants contained in this Section 8. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages from the Employee.

9.Reimbursement of Fees. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Employee may reasonably incur as a result of any contest by the Company, Internal Revenue Service or others regarding the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Employee about the amount of any payment pursuant to Section 3 of this Agreement) or in connection with any dispute arising from this Agreement, regardless of whether Employee prevails in any such contest or dispute.

10.Certain Reductions of Payments by the Company. Notwithstanding anything herein to the contrary, if the aggregate of the amounts due the Employee under this Agreement and any other plan or program of the Company constitutes a “Parachute Payment,” as such term is defined in Section 280G of the Internal Revenue Code of 1986, as amended, then the payments to be made to the Employee under this Agreement which are included in the determination of such Parachute Payment shall be reduced to an amount which, when added to the aggregate of all other payments to be made to the Employee which are included in the determination of such Parachute Payment as a result of the termination of his/her employment, will make the total amount of such payment equal to 2.99 times his/her Base Amount. The determinations to be made with respect to this paragraph shall be made by an independent auditor (the “Auditor”) jointly selected by the Employee and the Company and paid by the Company. In the event the payments to be made to the Employee are required to be reduced pursuant to the limitations in this Section 10, the Company shall allow the Employee to select which payment or benefits Employee wants the Company to reduce in order that the total amount of such payment is equal to 2.99 times such Employee’s Base Amount. The Auditor shall be a nationally recognized United States public accounting firm that has not, during the two years preceding the date of its selection, acted in any way on behalf of the Company or any of its subsidiaries.

11.Resolution of Differences Over Breaches of Agreement. Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to this Agreement, or the breach thereof, or arising out of any other matter relating to the Employee’s employment with the Company or the termination of such employment, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof and if any relief other than injunctive relief is sought, the Company and the Employee agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance with

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this Section 11 of this Agreement and the Commercial Arbitration Rules of the American Arbitration Association (“AAA”). The matter shall be heard and decided, and awards rendered by a panel of three (3) arbitrators (the “Arbitration Panel”). The Company and the Employee shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators  (the “Commercial Panel”) and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof.

12.Treatment of Certain Incentive Awards. All “Awards” held by the Employee under the Company’s 1999 Long-Term Incentive Plan (the “1999 Plan”) shall, upon a Change of Control, be treated in accordance with the terms of those Plans as in effect on the date of this Agreement, without regard to the subsequent amendment of those Plans. For purposes of this Section 12, the terms “Award” and “Change of Control” shall have the meanings ascribed to them in the 1999 Plan.

13.Release. The Employee hereby acknowledges and agrees that prior to the Employee’s or his/her dependents’ right to receive from the Company any compensation or benefit to be paid or provided to him/her or his/her dependents pursuant to Section 3 of this Agreement, the Employee may be required by the Company, in its sole discretion, to execute a release in a form reasonably acceptable to the Company, which releases any and all claims (other than amounts to be paid to Employee as expressly provided for under this Agreement) the Employee has or may have against the Company or its subsidiaries, agents, officers, directors, successors or assigns arising under any public policy, tort or common law or any provision of state, federal or local law, including, but not limited to, the Pennsylvania Human Relations Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Protection Act, Family and Medical Leave Act, the Fair Labor Standards Act, or the Age Discrimination in Employment Act of 1967.

14.Waiver. The waiver by a party hereto of any breach by the other party hereto of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by a party hereto.

Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. The Company shall be obligated to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the Company’s business or assets, by a written agreement in form and substance satisfactory to the Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Employee or his/her legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Employee may not delegate any of his/her duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation by him shall be void and of no force and effect with respect to matters relating

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to his/her employment and termination of employment. Without limiting the foregoing, the Employee’s rights to receive payments and benefits hereunder shall not be assignable or transferable, other than a transfer by Employee’s will or by the laws of descent and distribution.

15.Notices. Any notices required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested — in the case of the Employee, to his/her residence address as set forth below, and in the case of the Company, to the address of its principal place of business as set forth below, in care of the Chairman of the Board — or to such other person or at such other address with respect to each party as such party shall notify the other in writing.

16.Pronouns. Pronouns stated in either the masculine, feminine or neuter gender shall include the masculine, feminine and neuter.

17.Entire Agreement. This Agreement contains the entire agreement of the parties concerning the matters set forth herein and all promises, representations, understandings, arrangements and prior agreements regarding the subject matter hereof are merged herein and superseded hereby; provided that any noncompetition agreement shall not be merged or superseded but shall remain in full force and effect. The provisions of this Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing signed by the party against whom enforcement of any amendment, modification, repeal, waiver, extension or discharge is sought. No person acting other than pursuant to a resolution of the Board of Directors shall have authority on behalf of the Company to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto or to exercise any of the Company’s rights to terminate or to fail to extend this Agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers thereunto duly authorized, and the Employee has hereunto set his/her hand, all as of the day and year first above written.

ATTEST:	EQUITABLE RESOURCES, INC.
	By:	/s/ Gregory R. Spencer
		Gregory R. Spencer
		Senior Vice President and Chief
		Administrative Officer
	Address:
	One Oxford Centre
	Suite 3300
	Pittsburgh, PA 15219

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WITNESS:
	/s/ Charlene J. Gambino
	Address:

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EX-10.18(B)

Exhibit 10.18(b)

NONCOMPETE AGREEMENT

This Agreement is made as of October 23, by and between Equitable Resources, Inc., a Pennsylvania corporation (Equitable Resources, Inc. and its majority-owned subsidiaries are hereinafter collectively referred to as the “Company”), and Charlene J. Gambino (the “Employee”).

WITNESSETH:

WHEREAS, in order to protect the business and goodwill of the Company, the Company desires to obtain certain non-competition covenants from the Employee and the Employee desires to agree to such covenants in exchange for the Company’s agreement to pay certain severance benefits in the event that the Employee’s employment with the Company is terminated in certain events; and

WHEREAS, the Employee is willing to enter into this Agreement, which contains, among other things, specific non-competition agreements, in consideration of the simultaneous execution by the Company and the Employee of a Change of Control Agreement (the “Change of Control Agreement”), which enhances in certain respects the benefits that the Company will pay to the Employee if the Employee’s employment with the Company is terminated in certain events following a change of control of the Company.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.             If the employment of the Employee with the Company is terminated by the Company for any reason other than Cause (as defined below) or if the Employee terminates his or her employment with the Company for Good Reason (as defined below), the Company shall pay the Employee, from the date of termination, in addition to any payments to which the Employee is entitled under the Company’s severance pay plan, 12  months of base salary at the Employee’s annual base salary level in effect at the time of such termination or immediately prior to the salary reduction that serves as the basis for termination for Good Reason. Employee will also be entitled to 12 months of health benefits continuation and outplacement assistance for a period not to exceed 6 months. Such base salary amount shall be paid by the Company to the Employee in one lump sum payable within thirty (30) days after the Employee’s termination or resignation hereunder. Solely for purposes of this Agreement, “Cause” shall mean (i) a conviction of a felony, a crime of moral turpitude or fraud, (ii) the Employee’s willful and continuous engagement in conduct which is demonstrably and materially injurious to the Company, or (iii) the willful and continued refusal by the Employee to perform the duties of his or her position in a reasonable manner for thirty (30) days after written notice is given to the Employee by the Company specifying in reasonable detail the nature of the deficiency in the Employee’s performance. Solely for purposes of this Agreement, termination for “Good Reason” shall mean termination of employment by the Employee within ninety (90) days after (i) being demoted, or (ii) being given notice of a reduction in his or her annual base salary (other than a reduction of not more than 10% applicable to all senior officers of the Company).

2.             While the Employee is employed by the Company and for a period of six (6) months after date of Employee’s termination of employment with Company for any reason, the Employee shall not (i) directly or indirectly engage, whether as an employee, consultant, partner, owner, agent, stockholder, officer, director or otherwise, alone or in association with any other person or entity, in (A) the energy industry, including the production, transmission, distribution and marketing of oil, natural gas or electricity and the provision of related energy services (including project development and engineering analysis, construction management, project financing, equipment operation and maintenance, energy savings metering, monitoring and verification, and facilities management (developing and operating private power, cogeneration and central plant facilities)) anywhere in the continental United States (including the Gulf of Mexico), Central America or South America, except that the restriction as to the regulated distribution of oil, natural gas or electricity shall be limited to the markets in which the Company conducted such business or contemplated (with the Employee’s knowledge) conducting such business at the time of the termination of Employee’s employment, or (B) any business activity that competes with any project or proposed project which was discussed by or with the Employee in the course of his or her employment with the Company or any project or proposed project with respect to which the Company initiated any business activity during the course of his or her employment (for purposes of this subsection (i) employment or engagement by a customer of the Company to provide or manage services that are provided by the Company shall be deemed to violate this subsection (i)); (ii) directly or indirectly on his or her own behalf or on behalf of any other person or entity contact (A) any customer of the Company with whom he or she had contact while employed by the Company, or (B) any person or entity to whom he or she attempted to market the Company’s products and services while employed by the Company, in either case, for the purpose of soliciting the purchase of any product or service that competes with any product or service offered by the Company or which was considered to be offered by the Company while the Employee was employed by the Company; (iii) take away or interfere, or attempt to interfere, with any custom, trade or existing contractual relations of the Company, including any business project or any contemplated business project which representatives of the Company have discussed with any potential participant in such project; or (iv) directly or indirectly on his or her own behalf or on behalf of any other person or entity solicit or induce, or cause any other person or entity to solicit or induce, or attempt to induce, any employee or consultant to leave the employ of or engagement by the Company or its successors, assigns, or affiliates, or to violate the terms of their contracts with the Company.

3.             The Company may terminate this Agreement by giving 12 months’ prior written notice to the Employee; provided that all provisions of this Agreement shall apply if any event specified in sections 1 or 2 occurs prior to the expiration of such 12-month period. Notwithstanding anything in this Agreement to the contrary, this Agreement shall immediately terminate and be of no further force and effect upon the occurrence of a “Change of Control” as such term is defined in the Change of Control Agreement and neither the Company nor the Employee shall be bound by the terms of this Agreement following a Change of Control as so defined.

4.             The provisions of this Agreement are severable. To the extent that any provision of this Agreement is deemed unenforceable in any court of law the parties intend that such provision be construed by such court in a manner to make it enforceable.

5.             The Employee acknowledges and agrees that: (i) this Agreement is necessary for the protection of the legitimate business interests of the Company; (ii) the restrictions contained

in this Agreement are reasonable; (iii) the Employee has no intention of competing with the Company within the limitations set forth above; (iv) the Employee acknowledges and warrants that Employee believes that Employee will be fully able to earn an adequate livelihood for Employee and Employee’s dependents if the covenant not to compete contained in this Agreement is enforced against the Employee; and (v) the Employee has received adequate and valuable consideration for entering into this Agreement.

6.             The Employee stipulates and agrees that any breach of this Agreement by the Employee will result in immediate and irreparable harm to the Company, the amount of which will be extremely difficult to ascertain, and that the Company could not be reasonably or adequately compensated by damages in an action at law. For these reasons, the Company shall have the right, without objection from the Employee, to obtain such preliminary, temporary or permanent mandatory or restraining injunctions, orders or decrees as may be necessary to protect the Company against, or on account of, any breach by the Employee of the provisions of Section 2 hereof. In the event the Company obtains any such injunction, order, decree or other relief, in law or in equity, (i) the duration of any violation of Section 2 shall be added to the 6-month restricted period specified in Section 2, and (ii) the Employee shall be responsible for reimbursing the Company for all costs associated with obtaining the relief, including reasonable attorneys’ fees and expenses and costs of suit. Such right to equitable relief is in addition to the remedies the Company may have to protect its rights at law, in equity or otherwise.

7.             This Agreement (including the covenant not to compete contained in Section 2) shall be binding upon and inure to the benefit of the successors and assigns of the Company.

8.             This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. For the purpose of any suit, action or proceeding arising out of or relating to this Agreement, Employee irrevocably consents and submits to the jurisdiction and venue of any state or federal court located in Allegheny County, Pennsylvania. Employee agrees that service of the summons and complaint and all other process which may be served in any such suit, action or proceeding may be effected by mailing by registered mail a copy of such process to Employee at the addresses set forth below. Employee irrevocably waives any objection which they may now or hereafter have to the venue of any such suit, action or proceeding brought in such court and any claim that such suit, action or proceeding brought in such court has been brought in an inconvenient forum and agrees that service of process in accordance with this Section will be deemed in every respect effective and valid personal service of process upon Employee. Nothing in this Agreement will be construed to prohibit service of process by any other method permitted by law. The provisions of this Section will not limit or otherwise affect the right of the Company to institute and conduct an action in any other appropriate manner, jurisdiction or court. The Employee agrees that final judgment in such suit, action or proceeding will be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.

9.             This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written (other than the Change of Control Agreement). This Agreement may not be changed, amended, or modified, except by a written instrument signed by the parties.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers thereunto duly authorized, and the Employee has hereunto set his hand, all as of the day and year first above written.

ATTEST:	EQUITABLE RESOURCES, INC.
	By:	/s/ Gregory R. Spencer
WITNESS:	EMPLOYEE:
	/s/ Charlene J. Gambino

EX-10.19(A)

Exhibit 10.19(a)

CHANGE OF CONTROL AGREEMENT

THIS AGREEMENT (the “Agreement”) dated as of the 6^th day of November, 2004 (the “Effective Date”) is made by and between EQUITABLE RESOURCES, INC., a Pennsylvania corporation with its principal place of business at Pittsburgh, Pennsylvania (the “Company”), and DIANE L. PRIER, an individual (the “Employee”);

WITNESSETH:

WHEREAS, the Board of Directors of the Company (the “Board”) continues to believe that it is in the best interest of the Company and its shareholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company; that it is imperative to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Employee’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control; and that it is appropriate to provide the Employee with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Employee will be satisfied and which are competitive with those of other corporations in the industry in which the Company’s principal business activity is conducted; and

WHEREAS, in order to better accomplish the foregoing objectives, the Company and the Employee desire to terminate the Existing Agreement and to enter into this Agreement in order to enhance and clarify in certain respects the compensation and benefits payable to the Employee if the Employee’s employment terminates in certain circumstances following a Change of Control of the Company;

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.Term. The term of this Agreement shall commence on the Effective Date hereof and, subject to Sections 3(f), 5 and 8, shall terminate on the earlier of (i) the date of the termination of Employee’s employment by the Company for any reason prior to a Change of Control; or (ii) unless further extended as hereinafter set forth, the date which is thirty-six (36) months after the Effective Date; provided, that, commencing on the last day of the first full calendar month after the Effective Date and on the last day of each succeeding calendar month, the term of this Agreement shall be automatically extended without further action by either party (but not beyond the date of the termination of Employee’s employment prior to a Change of Control) for one (1) additional month unless one party provides written notice to the other party that such party does not wish to extend the term of this Agreement. In the event that such notice shall have been delivered, the term of this Agreement shall no longer be subject to automatic extension

and the term hereof shall expire on the date which is thirty-six (36) calendar months after the last day of the month in which such written notice is received.

2.Change of Control. Except as provided in Section 12, Change of Control shall mean any of the following events (each of such events being herein referred to as a “Change of Control”):

(a)The sale or other disposition by the Company of all or substantially all of its assets to a single purchaser or to a group of purchasers, other than to a corporation with respect to which, following such sale or disposition, more than eighty percent (80%) of, respectively, the then outstanding shares of Company common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of the Board of Directors is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively of the outstanding Company common stock and the combined voting power of the then outstanding voting securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Company common stock and voting power immediately prior to such sale or disposition;

(b)The acquisition in one or more transactions by any person or group, directly or indirectly, of beneficial ownership of twenty percent (20%) or more of the outstanding shares of Company common stock or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of the Board of Directors; provided, however, that the following shall not constitute a Change of Control:  (x) any acquisition by the Company or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, (y) an acquisition by any person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act (as such rule is in effect as of November 1, 1995) to file a statement on Schedule 13G with respect to its beneficial ownership of Company common stock and other voting securities, whether or not such person shall have filed a statement on Schedule 13G, unless such person shall have filed a statement on Schedule 13D with respect to beneficial ownership of fifteen percent or more of the Company’s voting securities, (z) an acquisition by any person or group of persons of not more than forty percent (40%) of the outstanding shares of Company common stock or the combined voting power of the then outstanding voting securities of the Company if such acquisition resulted from the issuance of capital stock by the Company and the issuance and the acquiring person or group was approved in advance of such issuance by at least two-thirds of the Continuing Directors then in office;

(c)The Company’s termination of its business and liquidation of its assets;

(d)There is consummated a merger, consolidation, reorganization, share exchange, or similar transaction involving the Company (including a triangular merger), in any case, unless immediately following such transaction:  (i) all or substantially all of

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the persons who were the beneficial owners of the outstanding common stock and outstanding voting securities of the Company immediately prior to the transaction beneficially own, directly or indirectly, more than 60% of the outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such transaction (including a corporation or other person which as a result of such transaction owns the Company or all or substantially all of the Company’s assets through one or more subsidiaries (a “Parent Company”)) in substantially the same proportion as their ownership of the common stock and other voting securities of the Company immediately prior to the consummation of the transaction, (ii) no person (other than (A) the Company, any employee benefit plan sponsored or maintained by the Company or, if reference was made to equity ownership of any Parent Company for purposes of determining whether clause (i) above is satisfied in connection with the transaction, such Parent Company, or (B) any person or group that satisfied the requirements of subsection (b)(y), above, prior to such transaction) beneficially owns, directly or indirectly, 20% or more of the outstanding shares of common stock or the combined voting power of the voting securities entitled to vote generally in the election of directors of the corporation resulting from such transaction and (iii) individuals who were members of the Company’s Board of Directors immediately prior to the consummation of the transaction constitute at least a majority of the members of the board of directors resulting from such transaction (or, if reference was made to equity ownership of any Parent Company for purposes of determining whether clause, (i) above is satisfied in connection with the transaction, such Parent Company); or

(e)The following individuals (sometimes referred to herein as “Continuing Directors”) cease for any reasons to constitute a majority of the number of directors then serving:  individuals who, on the date hereof, constitute the entire Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved.

3.Salary and Benefits Continuation.

(a)“Salary and Benefits Continuation” shall be defined to mean the following:

(i)payment of an amount of cash equal to two (2) times the Employee’s base salary at the rate of base salary per annum in effect immediately prior to the Change of Control or the termination of Employee’s employment, whichever is higher;

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(ii)payment of an amount of cash equal to two (2) times the greater of (A) the highest annual incentive (bonus) payment earned (including all deferred amounts) by the Employee under the Company’s Short-Term Incentive Plan (or any successor plan) for any year in the five (5) years prior to the termination of Employee’s employment or (B) the target incentive (bonus) award under the Company’s Short-Term Incentive Plan (or any successor plan) for the year in which the Change of Control or termination of Employee’s employment occurs, whichever is higher;

(iii)provision to Employee and his/her eligible dependents of medical, long-term disability, dental and life insurance coverage (to the extent such coverage was in effect immediately prior to the Change of Control) for twenty-four (24) months (at the end of which period the Company shall make such benefits available to the Employee and his/her eligible dependents in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), whether or not the Company is then required to comply with COBRA); and if the Employee would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans (as in effect immediately prior to the Change of Control or the date of the Employee’s termination of employment, whichever is most favorable to the Employee) had the Employee’s employment terminated at any time during the period of twenty-four (24) months after such date of termination, the Company shall provide such post-retirement health care or life insurance benefits to the Employee (subject to any employee contributions required under the terms of such plans at the level in effect immediately prior to the Change of Control or the date of termination, whichever is more favorable to the Employee) commencing on the later of (i) the date that such coverage would have first become available or (ii) the date that benefits described in this subsection (iii) terminate;

(iv)contribution by the Company to Employee’s account under the Company’s defined contribution retirement plan (currently, the Equitable Resources, Inc. Employee Savings Plan) of an amount of cash equal to the amount that the Company would have contributed to such plan (including both retirement contributions and Company matching contributions in respect of Employee contributions to the plan) had the Employee continued to be employed by the Company for an additional twenty-four (24) months at a base salary equal to the Employee’s base salary immediately prior to the Change of Control or the termination of Employee’s employment, whichever is higher (and assuming for this purpose that the Employee continued to make the maximum permissible contributions to such plan during such period), such contribution being deemed to be made immediately prior to the termination of Employee’s employment; provided, that to the extent that the amount of such contribution exceeds the amount then allowed to be contributed to the plan under the applicable rules relating to tax-qualified retirement plans, then the excess shall be

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paid to the Employee in cash (for the avoidance of doubt, such cash payment includes the amount that the Company would have otherwise contributed to the Company’s Deferred Compensation Plan (or other non-qualified plan) in respect of both retirement and matching contributions under the Company’s Employee Savings Plan (or any successor plan) because of applicable rules relating to tax-qualified retirement plans);

(v)reimbursement to Employee of reasonable costs incurred by Employee for outplacement services in the twelve (12) month period following termination of Employee’s employment; and

(b)All amounts payable by the Company to the Employee in cash pursuant to Section 3(a) shall be made in a lump sum unless the Employee otherwise elects and notifies the Company in writing prior to the termination of Employee’s employment of Employee’s desire to have all payments made in accordance with the Company’s regular salary and benefit payment practices, provided that (i) the lump sum payment or first payment shall be made within thirty (30) days after the Employee’s termination, and (ii) the Employee may elect to defer such payments pursuant to the Company’s then-existing deferred compensation plan(s). All other amounts payable by the Company to the Employee pursuant to Section 3 shall be paid or provided in accordance with the Company’s standard payroll and reimbursement procedures, as in effect immediately prior to the Change of Control.

(c)In the event that medical, long-term disability, dental and life insurance benefits cannot be provided under appropriate Company group insurance policies pursuant to Section 3(a)(iii), an amount equal to the premium necessary for the Employee to purchase directly the same level of coverage in effect immediately prior to the Change of Control shall be added to the Company’s payments to Employee pursuant to Section 3(a) (payable in the manner elected by the Employee pursuant to Section 3(b)). If Employee is required to pay income or other taxes on any medical, long-term disability, dental or life insurance benefits provided or paid to the Employee pursuant to Section 3(a)(iii) or this Section 3(c), then the Company shall pay to the Employee an amount of cash sufficient to “gross-up” such benefits or payments so that Employee’s “net” benefits received under Section 3(a)(iii) and this Section 3(c) are not diminished by any such taxes that are imposed with respect to the same or the Company’s gross-up hereunder with respect to such taxes.

(d)If there is a Change of Control as defined above, the Company will provide Salary and Benefits Continuation if at any time during the first twenty-four (24) months following the Change of Control, either (i) the Company terminates the Employee’s employment other than for Cause as defined in Section 4 below or (ii) the Employee terminates his/her employment for “Good Reason” as defined below.

(e)For purposes of this Agreement, “Good Reason” is defined as:

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(i)Removal of the Employee from the position he/she held immediately prior to the Change of Control (by reason other than death, disability or Cause);

(ii)The assignment to the Employee of any duties inconsistent with those performed by the Employee immediately prior to the Change of Control or a substantial alteration in the nature or status of the Employee’s responsibilities which renders the Employee’s position to be of less dignity, responsibility or scope;

(iii)A reduction by the Company in the overall level of compensation of the Employee for any year from the level in effect for the Employee in the prior year. For purposes of this subsection (iii), the following shall not constitute a reduction in the overall level of compensation of the Employee:  (A) across-the-board reductions in base salary similarly affecting all executives of the Company and all executives of any person in control of the Company, provided, however, that the Employee’s annual base salary rate shall not be reduced by an amount equal to ten percent or more of the Employee’s annual base salary rate in effect immediately prior to the Change of Control; (B) changes in the mix of base salary payable to and the short-term incentive opportunity available to the Employee; provided, that in no event shall the Employee’s base salary for any year be reduced below 90% of the annual base salary paid to such Employee in the prior year; (C) a reduction in the compensation of the Employee resulting from the failure to achieve corporate, business unit and/or individual performance goals established for purposes of incentive compensation for any year or other period; provided, that the aggregate short-term incentive opportunity, when combined with the Employee’s annual base salary, provides, in the aggregate, an opportunity for the Employee to realize at least the same overall level of base salary and short term incentive compensation as was paid in the immediately prior year or period at target performance levels; and provided, further, that such target performance levels are reasonable at all times during the measurement period, taking into account the fact that one of the purposes of such compensation is to incentivize the Employee; (D) reductions in compensation resulting from changes to any Company benefit plan; provided, that such changes are generally applicable to all participants in such Company benefit plan; and (E) any combination of the foregoing;

(iv)The failure to grant the Employee an annual salary increase reasonably necessary to maintain such salary as reasonably comparable to salaries of senior executives holding positions equivalent to the Employee’s in the industry in which the Company’s then principal business activity is conducted;

(v)The Company requiring the Employee to be based anywhere other than the Company’s principal executive offices in the city in which the Employee is principally located immediately prior to the Change of

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Control, except for required travel on the Company’s business to an extent substantially consistent with the Employee’s business travel obligations prior to the Change of Control;

(vi)Any material reduction by the Company of the benefits enjoyed by the Employee under any of the Company’s pension, retirement, profit sharing, savings, life insurance, medical, health and accident, disability or other employee benefit plans, programs or arrangements, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Employee of any material fringe benefits, or the failure by the Company to provide the Employee with the number of paid vacation days to which he/she is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy, provided that this paragraph (vi) shall not apply to any proportional across-the-board reduction or action similarly affecting all executives of the Company and all executives of any person in control of the Company; or

(vii)The failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 15 hereof, or any other material breach by the Company of its obligations contained in this Agreement.

(f)The Employee’s right to Salary and Benefits Continuation shall accrue upon the occurrence of either of the events specified in (i) or (ii) of Section 3(d) and shall continue as provided, notwithstanding the termination or expiration of this Agreement pursuant to Section 1 hereof. The Employee’s subsequent employment, death or disability following the Employee’s termination of employment in connection with a Change of Control shall not affect the Company’s obligation to continue making Salary and Benefits Continuation payments. The Employee shall not be required to mitigate the amount of any payment provided for in this Section 3 by seeking employment or otherwise. The rights to Salary and Benefits Continuation shall be in addition to whatever other benefits the Employee may be entitled to under any other agreement or compensation plan, program or arrangement of the Company; provided, that the Employee shall not be entitled to any separate or additional severance payments pursuant to the Company’s severance plan as then in effect and generally applicable to similarly situated employees. The Company shall be authorized to withhold from any payment to the Employee, his/her estate or his/her beneficiaries hereunder all such amounts, if any, that the Company may reasonably determine it is required to withhold pursuant to any applicable law or regulation.

4.Termination of Employee for Cause.

(a)Upon or following a Change of Control, the Company may at any time terminate the Employee’s employment for Cause. Termination of employment by the

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Company for “Cause” shall mean termination upon:  (i) the willful and continued failure by the Employee to substantially perform his/her duties with the Company (other than (A) any such failure resulting from Employee’s disability or (B) any such actual or anticipated failure resulting from Employee’s termination of his/her employment for Good Reason), after a written demand for substantial performance is delivered to the Employee by the Board of Directors which specifically identifies the manner in which the Board of Directors believes that the Employee has not substantially performed his/her duties, and which failure has not been cured within thirty days (30) after such written demand; or (ii) the willful and continued engaging by the Employee in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise, or (iii) the breach by the Employee of any of the covenants set forth in Section 8 hereof.

(b)For purposes of this Section 4, no act, or failure to act, on the Employee’s part shall be considered “willful” unless done, or omitted to be done, by the Employee in bad faith and without reasonable belief that such action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him/her a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board of Directors at a meeting of the Board of Directors called and held for that purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with his/her counsel, to be heard before the Board of Directors) finding that in the good faith opinion of the Board of Directors the Employee is guilty of the conduct set forth above in clauses (a)(i), (ii) or (iii) of this Section 4 and specifying the particulars thereof in detail.

5.Prior Termination. Anything in this Agreement to the contrary notwithstanding, if the Employee’s employment with the Company is terminated prior to the date on which a Change of Control occurs either (i) by the Company other than for Cause or (ii) by the Employee for Good Reason, and it is reasonably demonstrated by Employee that such termination of employment (a) was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control, or (b) otherwise arose in connection with or anticipation of the Change of Control, then for all purposes of this Agreement the termination shall be deemed to have occurred upon a Change of Control and the Employee will be entitled to Salary and Benefits Continuation as provided for in Section 3 hereof.

6.Employment at Will. Subject to the provisions of any other agreement between the Employee and the Company, the Employee shall remain an employee at will and nothing herein shall confer upon the Employee any right to continued employment and shall not affect the right of the Company to terminate the Employee for any reason not prohibited by law; provided, however, that any such removal shall be without prejudice to any rights the Employee may have to Salary and Benefits Continuation hereunder.

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7.Construction of Agreement.

(a)Governing Law. This Agreement shall be governed by and construed under the laws of the Commonwealth of Pennsylvania without regard to its conflict of law provisions.

(b)Severability. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(c)Headings. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience of reference only and shall not constitute a part of this Agreement.

8.Covenant as to Confidential Information.

(a)Confidentiality of Information and Nondisclosure. The Employee acknowledges and agrees that his/her employment by the Company necessarily involves his/her knowledge of and access to confidential and proprietary information pertaining to the business of the Company and its subsidiaries. Accordingly, the Employee agrees that at all times during the term of this Agreement and for a period of two (2) years after the termination of the Employee’s employment, he/she will not, directly or indirectly, without the express written authority of the Company, unless directed by applicable legal authority having jurisdiction over the Employee, disclose to or use, or knowingly permit to be so disclosed or used, for the benefit of himself/herself, any person, corporation or other entity other than the Company and its subsidiaries, (i) any information concerning any financial matters, customer relationships, competitive status, supplier matters, internal organizational matters, current or future plans, or other business affairs of or relating to the Company and its subsidiaries, (ii) any management, operational, trade, technical or other secrets or any other proprietary information or other data of the Company or its subsidiaries, or (iii) any other information related to the Company or its subsidiaries which has not been published and is not generally known outside of the Company. The Employee acknowledges that all of the foregoing, constitutes confidential and proprietary information, which is the exclusive property of the Company.

(b)Company Remedies. The Employee acknowledges and agrees that any breach of this Section 8 by him/her will result in immediate irreparable harm to the Company, and that the Company cannot be reasonably or adequately compensated by damages in an action at law. In the event of an actual or threatened breach by the Employee of the provisions of this Section 8, the Company shall be entitled, to the extent permissible by law, immediately to cease to pay or provide the Employee or his/her dependents any compensation or benefit being, or to be, paid or provided to him pursuant to Section 3 of this Agreement, and also to obtain immediate injunctive relief restraining the Employee from conduct in breach or threatened breach of the covenants contained in this Section 8. Nothing herein shall be construed as prohibiting the Company

9

from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages from the Employee.

9.Reimbursement of Fees. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Employee may reasonably incur as a result of any contest by the Company, Internal Revenue Service or others regarding the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Employee about the amount of any payment pursuant to Section 3 of this Agreement) or in connection with any dispute arising from this Agreement, regardless of whether Employee prevails in any such contest or dispute. The Company shall pay such fees and expenses within ten (10) days after the presentment of an invoice for the same by the Employee and any amounts not paid within such period shall bear interest at the rate per annum established by PNC Bank, National Association (or its successor) from time to time as its “prime” or equivalent rate.

10.Tax Gross-Up

(a)Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Internal Revenue Code of 1986, as amended (the “Code”), resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments.

(b)Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or

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such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee.

(c)The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall:

(i)give the Company any information reasonably requested by the Company relating to such claim;

(ii)take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;

(iii)cooperate with the Company in good faith in order effectively to contest such claim; and

(iv)permit the Company to participate in any proceedings relating to such claim;

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provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise Tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d)If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

(e)The payments provided for in this Section 10 shall be made not later than the tenth (10th) day following the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the

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minimum amount of such payments to which the Employee is clearly entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the termination of the Employee’s employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Employee, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code.

11.Resolution of Differences Over Breaches of Agreement. Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to this Agreement, or the breach thereof, or arising out of any other matter relating to the Employee’s employment with the Company or the termination of such employment, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof and if any relief other than injunctive relief is sought, the Company and the Employee agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance with this Section 11 of this Agreement and the Commercial Arbitration Rules of the American Arbitration Association (“AAA”). The matter shall be heard and decided, and awards rendered by a panel of three (3) arbitrators (the “Arbitration Panel”). The Company and the Employee shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the “Commercial Panel”) and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof.

12.Treatment of Certain Incentive Awards. All “Awards” held by the Employee under the Company’s 1999 Long-Term Incentive Plan (the “1999 Plan”) shall, upon a Change of Control, be treated in accordance with the terms of those Plans as in effect on the date of this Agreement, without regard to the subsequent amendment of those Plans. For purposes of this Section 12, the terms “Award” and “Change of Control” shall have the meanings ascribed to them in the 1999 Plan, as the case may be.

13.Release. The Employee hereby acknowledges and agrees that prior to the Employee’s or his/her dependents’ right to receive from the Company any compensation or benefit to be paid or provided to him/her or his/her dependents pursuant to Section 3 of this Agreement, the Employee may be required by the Company, in its sole discretion, to execute a release in a form reasonably acceptable to the Company, which releases any and all claims (other than amounts to be paid to Employee as expressly provided for under this Agreement) the Employee has or may have against the Company or its

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subsidiaries, agents, officers, directors, successors or assigns arising under any public policy, tort or common law or any provision of state, federal or local law, including, but not limited to, the Pennsylvania Human Relations Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Protection Act, Family and Medical Leave Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act of 1967, or the Employee Retirement Income Security Act of 1974, all as amended.

14.Waiver. The waiver by a party hereto of any breach by the other party hereto of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by a party hereto.

15.Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. The Company shall be obligated to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the Company’s business or assets, by a written agreement in form and substance satisfactory to the Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Employee or his/her legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Employee may not delegate any of his/her duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation by him shall be void and of no force and effect with respect to matters relating to his/her employment and termination of employment. Without limiting the foregoing, the Employee’s rights to receive payments and benefits hereunder shall not be assignable or transferable, other than a transfer by Employee’s will or by the laws of descent and distribution.

16.Notices. Any notices required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested — in the case of the Employee, to his/her residence address as set forth below, and in the case of the Company, to the address of its principal place of business as set forth below, in care of the Chairman of the Board — or to such other person or at such other address with respect to each party as such party shall notify the other in writing.

17.Pronouns. Pronouns stated in either the masculine, feminine or neuter gender shall include the masculine, feminine and neuter.

18.Entire Agreement. This Agreement contains the entire agreement of the parties concerning the matters set forth herein and all promises, representations, understandings, arrangements and prior agreements regarding the subject matter hereof (including the Existing Agreement, which the parties agree shall terminate as of the Effective Date hereof) are merged herein and superseded hereby. The provisions of this Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing signed by the party against whom enforcement of any amendment,

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modification, repeal, waiver, extension or discharge is sought. No person acting other than pursuant to a resolution of the Board of Directors shall have authority on behalf of the Company to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto or to exercise any of the Company’s rights to terminate or to fail to extend this Agreement.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers thereunto duly authorized, and the Employee has hereunto set his/her hand, all as of the day and year first above written.

ATTEST:	EQUITABLE RESOURCES, INC.
/s/Tracy Caruso	/s/ Charlene Petrelli
	By:	Charlene Petrelli
	Title:		Vice President, Human Resources
	Address:
	One Oxford Centre
	Suite 3300
	Pittsburgh, PA 15219
WITNESS:
/s/Philip R. Prier	/s/ Diane L. Prier
	Name: Diane L. Prier
	Address:
	3151 Discovery Bay Drive
	Anchorage, AK 99515

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EX-10.19(B)

Exhibit 10.19(b)

NONCOMPETE AGREEMENT

This Agreement is made as of Nov. 6, 2004 by and between Equitable Resources, Inc., a Pennsylvania corporation (Equitable Resources, Inc. and its majority-owned subsidiaries are hereinafter collectively referred to as the “Company”), and Diane L. Prier (the “Employee”).

WITNESSETH:

WHEREAS, in order to protect the business and goodwill of the Company, the Company desires to obtain certain non-competition covenants from the Employee and the Employee desires to agree to such covenants in exchange for the Company’s agreement to pay certain severance benefits in the event that the Employee’s employment with the Company is terminated in certain events; and

WHEREAS, the Employee is willing to enter into this Agreement, which contains, among other things, specific non-competition agreements, in consideration of the simultaneous execution by the Company and the Employee of a Change of Control Agreement (the “Change of Control Agreement”), which enhances in certain respects the benefits that the Company will pay to the Employee if the Employee’s employment with the Company is terminated in certain events following a change of control of the Company.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.             If the employment of the Employee with the Company is terminated by the Company for any reason other than Cause (as defined below), the Company shall pay the Employee, from the date of termination, twenty-four (24) months of base salary at the Employee’s annual base salary level in effect at the time of such termination or immediately prior to the salary reduction that serves as the basis for termination for Good Reason. Employee will also be entitled to twenty-four (24) months of health benefits continuation and outplacement assistance for a period not to exceed twelve (12) months. Such base salary amount shall be paid by the Company to the Employee in one lump sum payable within thirty (30) days after the Employee’s termination or resignation hereunder. Solely for purposes of this Agreement, “Cause” shall mean (i) a conviction of a felony, a crime of moral turpitude or fraud, (ii) the Employee’s willful and continuous engagement in conduct which is demonstrably and materially injurious to the Company, or (iii) the willful and continued refusal by the Employee to perform the duties of his or her position in a reasonable manner for thirty (30) days after written notice is given to the Employee by the Company specifying in reasonable detail the nature of the deficiency in the Employee’s performance.

2.             While the Employee is employed by the Company and for a period of twelve (12) months after date of Employee’s termination of employment with Company for any reason, the Employee shall not (i) directly or indirectly engage, whether as an employee, consultant, partner, owner, agent, stockholder, officer, director or otherwise, alone or in association with any other person or entity, in (A) the energy industry, including the exploration, production, transmission, distribution and marketing of oil, natural gas or natural gas liquids anywhere in the continental

United States east of the Mississippi River (excluding the Gulf of Mexico), except that the restriction as to the regulated distribution of oil, natural gas or natural gas liquids shall be limited to the markets in which the Company conducted such business or contemplated (with the Employee’s knowledge) conducting such business at the time of the termination of Employee’s employment, or (B) any business activity that competes with any project or proposed project which was discussed by or with the Employee in the course of his or her employment with the Company or any project or proposed project with respect to which the Company initiated any business activity during the course of his or her employment (for purposes of this subsection (i) employment or engagement by a customer of the Company to provide or manage services that are provided by the Company shall be deemed to violate this subsection (i)); (ii) directly or indirectly on his or her own behalf or on behalf of any other person or entity contact (A) any customer of the Company with whom he or she had contact while employed by the Company, or (B) any person or entity to whom he or she attempted to market the Company’s products and services while employed by the Company, in either case, for the purpose of soliciting the purchase of any product or service that competes with any product or service offered by the Company or which was considered to be offered by the Company while the Employee was employed by the Company; (iii) take away or interfere, or attempt to interfere, with any custom, trade or existing contractual relations of the Company, including any business project or any contemplated business project which representatives of the Company have discussed with any potential participant in such project; or (iv) directly or indirectly on his or her own behalf or on behalf of any other person or entity solicit or induce, or cause any other person or entity to solicit or induce, or attempt to induce, any employee or consultant to leave the employ of or engagement by the Company or its successors, assigns, or affiliates, or to violate the terms of their contracts with the Company. Employee may purchase or otherwise acquire up to (but not more than) 1% of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934.

3.             The Company may terminate this Agreement by giving twenty-four (24) months’ prior written notice to the Employee; provided that all provisions of this Agreement shall apply if any event specified in sections 1 or 2 occurs prior to the expiration of such twenty-four (24) month period. Notwithstanding anything in this Agreement to the contrary, upon the occurrence of a Change of Control as such term is defined in the Change of Control Agreement, this Agreement shall remain in full force and effect and may not thereafter be terminated (even if notice of termination has been given in the previous twenty-four (24) months under the first sentence of this paragraph), except upon written notice by Employee to the Company. If Employee receives payment of benefits under the Change of Control Agreement, he shall not receive benefits under this Agreement, which shall thereupon terminate and be of no further force or effect.

4.             The provisions of this Agreement are severable. To the extent that any provision of this Agreement is deemed unenforceable in any court of law the parties intend that such provision be construed by such court in a manner to make it enforceable. In an action by the Company to enforce the covenants set forth in paragraph 2 hereof, any claims asserted by Employee against the Company, including but not limited to a claim by the Employee for breach of this Agreement, shall not constitute a defense to the Company’s action to enforce the aforementioned covenants.

5.             The Employee acknowledges and agrees that: (i) this Agreement is necessary for the protection of the legitimate business interests of the Company; (ii) the restrictions contained in this Agreement are reasonable; (iii) the Employee has no intention of competing with the Company within the limitations set forth above; (iv) the Employee acknowledges and warrants that Employee believes that Employee will be fully able to earn an adequate livelihood for Employee and Employee’s dependents if the covenant not to compete contained in this Agreement is enforced against the Employee; and (v) the Employee has received adequate and valuable consideration for entering into this Agreement.

6.             The Employee stipulates and agrees that any breach of this Agreement by the Employee will result in immediate and irreparable harm to the Company, the amount of which will be extremely difficult to ascertain, and that the Company could not be reasonably or adequately compensated by damages in an action at law. For these reasons, the Company shall have the right, without objection from the Employee, to obtain such preliminary, temporary or permanent mandatory or restraining injunctions, orders or decrees as may be necessary to protect the Company against, or on account of, any breach by the Employee of the provisions of Section 2 hereof. In the event the Company obtains any such injunction, order, decree or other relief, in law or in equity, (i) the duration of any violation of Section 2 shall be added to the 12 month restricted period specified in Section 2, and (ii) the Employee shall be responsible for reimbursing the Company for all costs associated with obtaining the relief, including reasonable attorneys’ fees and expenses and costs of suit. Such right to equitable relief is in addition to the remedies the Company may have to protect its rights at law, in equity or otherwise.

7.             This Agreement (including the covenant not to compete contained in Section 2) shall be binding upon and inure to the benefit of the successors and assigns of the Company.

8.             This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. For the purpose of any suit, action or proceeding arising out of or relating to this Agreement, Employee irrevocably consents and submits to the jurisdiction and venue of any state or federal court located in Allegheny County, Pennsylvania. Employee agrees that service of the summons and complaint and all other process which may be served in any such suit, action or proceeding may be effected by mailing by registered mail a copy of such process Employee at the addresses set forth below. Employee irrevocably waives any objection which they may now or hereafter have to the venue of any such suit, action or proceeding brought in such court and any claim that such suit, action or proceeding brought in such court has been brought in an inconvenient forum and agrees that service of process in accordance with this Section will be deemed in every respect effective and valid personal service of process upon Employee. Nothing in this Agreement will be construed to prohibit service of process by any other method permitted by law. The provisions of this Section will not limit or otherwise affect the right of the Company to institute and conduct an action in any other appropriate manner, jurisdiction or court. The Employee agrees that final judgment in such suit, action or proceeding will be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.

9.             This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written (other than the Change of Control Agreement). This Agreement may not be changed, amended, or modified, except by a written instrument signed by the parties.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers thereunto duly authorized, and the Employee has hereunto set his hand, all as of the day and year first above written.

ATTEST:	EQUITABLE RESOURCES, INC.
/s/ Tracy L. Caruso	By:	/s/ Charlene Petrelli
WITNESS:	EMPLOYEE:
/s/ Philip R. Prier	/s/ Diane L. Prier

EX-21

Exhibit 21

Subsidiaries of Registrant

As of December 31, 2005

Legal Name	Domicile
Equitable Resources, Inc.	USA, Pennsylvania
Appalachian Drilling LLC	USA, Delaware
Eastern Seven Partners, LP	USA, Delaware
Eastern Series 1997 Trusta	USA, Delaware
Eastern Four, LLC	USA, Delaware
EPC Investments, Inc.	USA, Delaware
ERI International	Cayman Islands
EQT Capital Corporation	USA, Delaware
EQT Holdings Company, LLC	USA, Delaware
EQT Holdings Management Company, LLC	USA, Delaware
EQT International Holdings Corporation	USA, Delaware
EQT Investments, LLC	USA, Delaware
EQT IP Ventures, LLC	USA, Delaware
Equitable Energy Holdings Corporation	USA, Delaware
Equitable Energy, LLC	USA, Delaware
Equitable Gathering, Inc.	USA, Pennsylvania
Equitable Gathering, LLC	USA, Delaware
Equitable Gathering Equity, LLC	USA, Delaware
Equitable Homeworks, LLC	USA, Pennsylvania
Equitable Production Company	USA, Pennsylvania
Equitable Production Services, LP	USA, Delaware
Equitable Resources Insurance Company, Ltd.	Cayman Islands
Equitable Utilities Investments, Inc.	USA, Delaware
Equitrans, LP	USA, Pennsylvania
ERI Group LDC	Cayman Islands
ERI Holdings	Cayman Islands
ET Blue Grass Clearing, LLC	USA, Delaware
ET Blue Grass Company	USA, Delaware
Kentucky West Virginia Gas Company, LLC	USA, Delaware

EX-23.01

Exhibit 23.01

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference of our reports dated February 10, 2006, with respect to the consolidated financial statements and schedule of Equitable Resources, Inc., Equitable Resources, Inc. management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Equitable Resources, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2005 in the following Registration Statements of Equitable Resources, Inc. and in the related Prospectuses:

•Registration Statement No. 33-52151 on Form S-8 pertaining to the 1994 Equitable Resources, Inc. Long-Term Incentive 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.;

•Post-effective Amendment No. 1 to Registration Statement No. 33-00252 on Form S-8 pertaining to the Equitable Resources, Inc. Employee Savings Plan;

•Registration Statement No. 333-01879 on Form S-8 pertaining to the Equitable Resources, Inc. Employee Stock Purchase Plan;

•Registration Statement No. 333-22529 on Form S-8 pertaining to the Equitable Resources, Inc. Employee Savings and Protection Plan;

•Registration Statement No. 333-06839 on Form S-3 pertaining to the registration of $168,000,000 of 7.75% debt securities of Equitable Resources, Inc.

•Registration Statement No. 333-82189 on Form S-8 pertaining to the 1999 Equitable Resources, Inc. Long-Term Incentive Plan;

•Registration Statement No. 333-82193 on Form S-8 pertaining to the 1999 Equitable Resources, Inc. Non-Employee Directors’ Stock Incentive Plan;

•Registration Statement No. 333-32410 on Form S-8 pertaining to the Equitable Resources, Inc. Deferred Compensation Plan and the Equitable Resources, Inc. Directors’ Deferred Compensation Plan;

•Registration Statement No. 333-70822 on Form S-8 pertaining to the 1999 Equitable Resources, Inc. Long-Term Incentive Plan.

•Registration Statement No. 333-122382 on Form S-8 pertaining to the 2005 Equitable Resources, Inc. Employee Deferred Compensation Plan and the 2005 Equitable Resources, Inc. Directors’ Deferred Compensation Plan.

Pittsburgh, Pennsylvania

February 22, 2006

EX-23.02

Exhibit 23.02

CONSENT

As independent petroleum and natural gas consultants, we hereby consent to the reference of our name in the Annual Report on Form 10-K, for the year ended December 31, 2005 of Equitable Resources, Inc, and to the incorporation of our name by reference into Equitable Resources, Inc.’s effective registration statements under the Securities Act of 1933, as amended.  We have no interest of a substantial or material nature in Equitable Resources, Inc., or in any affiliate. We have not been employed on a contingent basis, and we are not connected with Equitable Resources, Inc., or any affiliate as a promoter, underwriter, voting trustee, director, officer, employee, or affiliate.

/s/ Ryder Scott Company, L.P.

RYDER SCOTT COMPANY, L.P.

Houston, Texas

February 17, 2006

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Murry S. Gerber, certify that:

1.I have reviewed this Annual Report on Form 10-K of Equitable Resources, Inc.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditor and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2006
	/s/ Murry S. Gerber
	Murry S. Gerber
	Chairman, President
	and Chief Executive Officer

1

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David L. Porges, certify that:

1.I have reviewed this Annual Report on Form 10-K of Equitable Resources, Inc.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditor and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  February 24, 2006

/s/ David L. Porges

David L. Porges

Vice Chairman and Executive Vice President,

Finance and Administration

1

EX-31.3

Exhibit 31.3

CERTIFICATION

I, Philip P. Conti, certify that:

1.I have reviewed this Annual Report on Form 10-K of Equitable Resources, Inc.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditor and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2006
	/s/ Philip P. Conti
	Philip P. Conti
	Vice President and Chief Financial Officer

1

EX-32

Exhibit 32

CERTIFICATION

In connection with the Annual Report of Equitable Resources, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Murry S. Gerber	February 24, 2006
Murry S. Gerber, Chairman,
President and Chief Executive Officer
/s/ David L. Porges	February 24, 2006
David L. Porges, Vice Chairman and Executive
Vice President, Finance and Administration
(Principal Financial Officer)
/s/ Philip P. Conti	February 24, 2006
Philip P. Conti, Vice President and
Chief Financial Officer
(Principal Financial Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Equitable Resources, Inc. and will be retained by Equitable Resources, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.