EX-99 3 j9111701ex99.txt EXHIBIT-99 SUBSIDIARIES AND PRESS RELEASE Exhibit 99 Contact: Patrick Kane (412) 553-7833 EQUITABLE RESOURCES REPORTS CORE EARNINGS PER SHARE OF $0.32 28% HIGHER THAN THE THIRD QUARTER 2000 PITTSBURGH, October 19, 2001/ PRNewswire/ -- Equitable Resources Inc. (NYSE: EQT) today announced record third quarter 2001 earnings per diluted share, excluding earnings from Westport Resources, of $0.32 on net income of $21.2 million. This represents a 28% increase over the $0.25 per share, excluding Westport, on net income of $15.9 million reported for the same period last year. Including Westport, Equitable reported total earnings per diluted share of $0.38 on net income of $24.8 million for the 2001 quarter vs. $0.29 in the same quarter last year. "I am very pleased with the earnings and the progress made on a number of fronts including regulatory and asset management initiatives at Equitable Utilities and with NORESCO's record backlog," said Murry Gerber, CEO. "The nature of our businesses, in concert with various actions we have undertaken, including hedging, make our earnings relatively resilient to an economic downturn." QUARTERLY RESULTS BY BUSINESS EQUITABLE UTILITIES Equitable Utilities achieved earnings before interest and tax (EBIT) for the September 2001 quarter of $2.0 million, a slight increase from the $1.9 million reported for the same period last year. In September 2001, Equitable Utilities recorded $1.7 million in charges for process improvements related to compressor automation and a lease buyout. The compressor automation effort is expected to result in ongoing savings of about $0.7 million per year. Net revenues for the three months ended September 30, 2001 were $35.5 million compared to $34.6 million for the same quarter in 2000. This improvement in net operating revenues resulted in part from increased short-term storage services over the prior year quarter. Industrial volumes were down from the same quarter last year primarily due to the economic decline of the domestic steel industry. Because industrial margins are relatively low, the impact on the quarter's results was immaterial. Total expenses for the September 2001 quarter were $33.5 million compared to $32.7 million reported during the same period last year. After adjusting for the previously-described charges associated with the compressor station automation and lease buyout, total expenses at Utilities were down $0.9 million. The Company has begun to make tangible progress toward performance-based rates. In the third quarter, Equitable Gas Company received Pennsylvania Public Utility Commission approval on a performance-based initiative for managing pipeline transportation costs. The Company believes that the customers and shareholders will benefit from a performance-based rates framework. EQUITABLE PRODUCTION Revenues for the third quarter 2001 decreased 10% to $68.3 million compared to $75.9 million in 2000. The revenue decrease was primarily due to the sale of reserve interests at the end of the fourth quarter of 2000, -1- Exhibit 99 partially offset by an increased average effective gas price of $3.38 per Mcfe vs. $3.01 for the same period last year. Operating expenses for the September 2001 quarter were $28.4 million compared to $35.9 million last year. The reduction in operating expenses resulted from the aforementioned sale of reserve interests and from operational efficiencies. The resulting EBIT was $40.0 million, equal to the amount earned in the same period last year. NORESCO The NORESCO segment realized EBIT of $1.5 million compared to the $5.3 million posted in the third quarter last year. The decrease in EBIT is partially attributable to higher gross margins realized in the third quarter 2000 and higher expenses in the 2001 quarter. The higher 2000 gross margins were due to the timing of revenue recognition resulting from the completion of a few energy service projects during the quarter. Total revenue increased by 17% to $40.3 million compared to $34.4 million in 2000. This revenue increase, along with a significant rise in NORESCO's backlog to a record $142.4 million this period compared to $84.6 million a year earlier, illustrates the positive impact of focusing on larger projects. Total expenses for third quarter 2001 were $8.4 million compared to $6.5 million in the third quarter 2000. Expenses in the quarter were impacted by a $1.8 million charge related to office consolidation and an increase in bad debt reserves. After adjusting for these charges, expenses were essentially flat. Annual savings from the office consolidation are expected to be $0.8 million. OTHER BUSINESS WESTPORT On August 21, 2001, Westport Resources completed a merger with Belco Oil & Gas. Equitable continues to own 13.9 million shares, which now represent approximately 27% of Westport's total shares outstanding. Equitable Resources reported $3.6 million of equity earnings, net of taxes, from its minority ownership in Westport Resources during the third quarter 2001. STOCK BUYBACK During the quarter, Equitable Resources repurchased approximately 0.2 million shares of EQT stock. This brings the total number of shares repurchased since October 1998 to approximately 12.1 million out of the 18.8 million currently authorized. DIVIDEND On October 18, 2001, the Board of Directors of Equitable Resources declared a regular quarterly cash dividend of $0.16 per share, payable December 1, 2001 to shareholders of record on November 16, 2001. -2- Exhibit 99 EARNINGS GUIDANCE Equitable previously forecasted core earnings of $2.25 per share in 2001 with sustainable growth in the low double-digits, at the then-current 2002 NYMEX gas price of $3.50 per MMbtu. The Company also reported earnings sensitivity to gas price of $0.02 per share per $0.10 change in the average NYMEX gas price. This guidance remains unchanged. Equitable's teleconference with securities analysts will be broadcast live at 10:30 a.m. ET today via Equitable's website, http://www.eqt.com and will be available for replay for a 30 day period. Equitable resources management speaks to investors from time to time. Slides for these discussions will be available online on Equitable's website on October 26, 2001, http://www.eqt.com. The slides will be updated periodically. Equitable Resources is an integrated energy company, with emphasis on Appalachian area natural gas production supply, natural gas transmission and distribution, and leading-edge energy-management services for customers throughout the United States. The company also has energy-service management projects in selected international markets. DISCLOSURES IN THIS PRESS RELEASE CONTAIN FORWARD-LOOKING STATEMENTS RELATED TO SUCH MATTERS AS REDUCING COST OF OPERATIONS, LOWERING COST OF CAPITAL, SAVINGS FROM COMPRESSOR AUTOMATION, A LEASE BUYOUT AND CONSOLIDATION OF OFFICES, IMPACT OF FLUCTUATIONS IN THE ECONOMY ON ENERGY CONSUMPTION AND INVESTMENT IN ENERGY-RELATED PROJECTS, ANTICIPATED EARNINGS PER SHARE GROWTH, EFFECT OF HEDGE POSITIONS, IMPACT OF MONETIZATIONS AND USE OF PROCEEDS, AND FINANCIAL AND OPERATIONAL MATTERS. THE COMPANY NOTES THAT A VARIETY OF FACTORS COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE ANTICIPATED RESULTS OR OTHER EXPECTATIONS EXPRESSED IN THE COMPANY'S FORWARD-LOOKING STATEMENTS. THE RISKS AND UNCERTAINTIES THAT MAY AFFECT THE OPERATIONS, PERFORMANCE, DEVELOPMENT AND RESULTS OF THE COMPANY'S BUSINESS INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: WEATHER CONDITIONS, COMMODITY PRICES FOR NATURAL GAS AND CRUDE OIL AND ASSOCIATED HEDGING ACTIVITIES, CUSTOMER DEMAND FOR NATURAL GAS, ABILITY TO COMPLETE FUTURE MONETIZATIONS, CREDITWORTHINESS OF COUNTERPARTIES, AVAILABILITY OF FINANCING, CHANGES IN INTEREST RATES, LABOR NEGOTIATIONS, IMPLEMENTATION OF COST RESTRUCTURING INITIATIVES, UNANTICIPATED FAILURES OR DISRUPTIONS TO AUTOMATED SYSTEMS, UNANTICIPATED CURTAILMENTS OR DISRUPTIONS IN PRODUCTION AND TIMING AND AVAILABILITY OF REGULATORY AND GOVERNMENTAL APPROVALS. -3- Exhibit 99 EQUITABLE RESOURCES, INC. AND SUBSIDIARIES CORRECTED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) (Thousands except per share amounts)
Three Months Ended Nine Months Ended September 30 September 30 2001 2000 2001 2000 -------- -------- ---------- ---------- Operating revenues $243,768(1) $335,284 $1,440,469(9) $1,042,658 Cost of sales 131,073(2) 213,889 1,013,477 617,968 -------- -------- ---------- ---------- Net operating revenues 112,695(3) 121,395 426,992(10) 424,690 -------- -------- ---------- ---------- OPERATING EXPENSES: Operation and maintenance 19,469 21,526 60,696 63,069 Production and exploration 7,675 11,214 26,899 34,485 Selling, general and administrative 25,554(4) 24,996 85,817(11) 80,339 Depreciation, depletion and amortization 18,100 21,033 52,637 77,752 -------- -------- ---------- ---------- Total operating expenses 70,798(5) 78,769 226,049(12) 255,645 -------- -------- ---------- ---------- Operating income 41,897(6) 42,626 200,943 169,045 Other gain (loss) -- -- -- (6,951) Equity earnings of nonconsolidated investments Westport 5,465 4,568 19,932(13) 4,568 Other 1,134(7) 1,143 6,437(14) 3,567 -------- -------- ---------- ---------- 6,599(8) 5,711 26,369 8,135 EARNINGS BEFORE INTEREST & TAXES (EBIT) 48,496 48,337 227,312 170,229 Interest charges 10,188 21,176 31,000 56,210 -------- -------- ---------- ---------- Income before income taxes 38,308 27,161 196,312 114,019 Income taxes 13,508 8,020 68,809 39,550 -------- -------- ---------- ---------- NET INCOME $ 24,800 $ 19,141 $ 127,503 $ 74,469 ======== ======== ========== ========== EARNINGS PER SHARE OF COMMON STOCK: Basic: Weighted average common shares outstanding 63,912 64,938 64,470 65,162 Net income $ 0.39 $ 0.29 $ 1.98 $ 1.14 ======== ======== ========== ========== Diluted: Weighted average common shares outstanding 65,562 66,300 66,233 66,322 Net income $ 0.38 $ 0.29 $ 1.93 $ 1.12 ======== ======== ========== ==========
(A) Due to the seasonal nature of the Company's natural gas distribution and energy marketing businesses, and the volatility of gas and oil commodity prices, the interim statements for the three and nine month periods are not indicative of results for a full year. (1) Originally $243,762 (2) Originally $131,112 (3) Originally $112,650 (4) Originally $25,580 (5) Originally $70,825 (6) Originally $41,825 (7) Originally $1,204 (8) Originally $6,670 (9) Originally $1,440,343 (10) Originally $426,866 (11) Originally $85,693 (12) Originally $225,926 (13) Originally $19,333 (14) Originally $7,037 October 31, 2001 -4- Exhibit 99 EQUITABLE UTILITIES OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Nine Months Ended September 30 September 30 2001 2000 2001 2000 -------- -------- ---------- -------- OPERATIONAL DATA Heating degree days (normal: Qtr - 120, YTD - 3,848) 135 163 3,457 3,276 Residential sales and transportation volume (MMcf) 1,804 1,963 17,997 17,377 Commercial and industrial volume (MMcf) 3,385 5,045 17,991 22,663 -------- -------- ---------- -------- Total throughput (MMcf) - distribution 5,189 7,008 35,988 40,040 Total throughput (MMbtu) - pipeline 16,319 18,459 53,095 57,538 Total throughput (MMbtu) - marketing 39,645 54,831 170,052 170,208 Operating expenses/net revenues (%) 94.39% 94.44% 65.79% 64.30% EBIT (thousands) Distribution $ (1,419) $ (2,374) $ 41,229 $ 36,437 Pipeline $ 3,183 $ 3,910 $ 12,105 $ 16,789 Marketing $ 227 $ 385 $ 3,625 $ 5,509 Net Revenues - Distribution (thousands) Residential $ 13,188 $ 13,551 $ 75,879 $ 73,103 Commercial & Industrial $ 5,166 $ 4,966 $ 31,843 $ 31,234 O&M and SG&A (excluding other taxes)/Customer - Distribution $ 54.98 $ 59.25 $ 202.17 $ 200.82 Net revenue/Mmbtu - Marketing $ 0.0627 $ 0.0403 $ 0.0568 $ 0.0652 Capital expenditures (thousands) $ 9,265 $ 7,468 $ 26,002 $ 18,923 FINANCIAL DATA (THOUSANDS) Utility revenues $ 40,495 $ 39,062 $ 318,423 $228,929 Marketing revenues 120,549 237,271 902,690 611,370 -------- -------- ---------- -------- Total revenues 161,044 276,333 1,221,113 840,299 Purchased natural gas cost 125,541 241,762 1,054,610 675,773 -------- -------- ---------- -------- Net revenues 35,503 34,571 166,503 164,526 Operating and maintenance expense 13,133 14,837 42,780 44,547 Selling, general and administrative expense 13,205 10,990 46,900 39,038 Depreciation, depletion and amortization 7,174 6,823 19,864 22,206 -------- -------- ---------- -------- Total expenses 33,512 32,650 109,544 105,791 -------- -------- ---------- -------- EBIT $ 1,991 $ 1,921 $ 56,959 $ 58,735 ======== ======== ========== ========
October 31, 2001 -5- Exhibit 99 EQUITABLE PRODUCTION OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Nine Months Ended September 30 September 30 2001 2000 2001 2000 ------- ------- -------- -------- OPERATIONAL DATA (EXCLUDING GULF OPERATIONS) PRODUCTION: Net equity sales, natural gas and equivalents (MMcfe) 9,459 16,943 28,052 51,191 Average (well-head) sales price ($/Mcfe) $ 3.28 $ 3.14 $ 3.98 $ 2.93 Monetized sales (MMcfe) 5,676 2,821 17,056 8,520 Average (well-head) sales price ($/Mfce) $ 3.55 $ 2.26 $ 3.98 $ 1.94 Company usage, line loss (MMcfe) 1,854 1,509 4,336 4,854 Lease operating expense excluding severance tax ($/Mcfe) $ 0.29 $ 0.33 $ 0.33 $ 0.32 Severance tax ($/Mcfe) $ 0.13 $ 0.18 $ 0.18 $ 0.14 Depletion ($/Mcfe) $ 0.38 $ 0.48 $ 0.38 $ 0.49 PRODUCTION SERVICES: Gathered volumes (MMcfe) 26,906 26,427 79,326 70,763 Average gathering fee ($/Mcfe) $ 0.56 $ 0.53 $ 0.58 $ 0.58 Gathering and compression expense ($/Mcfe) $ 0.24 $ 0.25 $ 0.23 $ 0.26 Gathering and compression depreciation ($/Mcfe) $ 0.10 $ 0.10 $ 0.10 $ 0.10 Total operated volumes (MMcfe) 23,576 24,499 69,105 67,792 Volumes handled (MMcfe) 30,955 29,042 89,978 78,599 Selling, general and administrative ($/Mcfe handled) $ 0.16 $ 0.19 $ 0.20 $ 0.21 Capital expenditures (excludes Statoil Acquisition) (thousands) $29,571 $23,767 $ 56,831 $ 46,902 FINANCIAL DATA (THOUSANDS) Revenue from production $51,117 $59,525 $179,639 $166,479 Services: Revenue from gathering fees 15,032 13,986 45,844 41,164 Other revenues 2,174 2,387 8,883 8,717 ------- ------- -------- -------- Total revenues 68,323 75,898 234,366 216,360 Gathering and compression expenses 6,336 6,685 17,916 18,505 Lease operating expense 4,993 7,019 16,227 20,879 Severance tax 2,154 3,738 9,042 8,952 Depreciation, depletion and amortization 9,387 13,084 28,254 44,585 Selling, general and administrative 5,006 5,126 18,000 16,684 Exploration, including dry hole expense 528 261 1,630 2,677 ------- ------- -------- -------- Total operating expenses 28,404 35,913 91,069 112,282 Equity earnings from nonconsolidated investments 115 -- 660 -- Other income/(expense) -- -- -- (6,951) EBIT excluding Gulf operations 40,034 39,985 143,957 97,127 EBIT from Gulf operations -- -- -- 6,426 ------- ------- -------- -------- Total EBIT $40,034 $39,985 $143,957 $103,553 ======= ======= ======== ========
October 31, 2001 -6- Exhibit 99 NORESCO OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Nine Months Ended September 30 September 30 2001 2000 2001 2000 -------- ------- -------- ------- OPERATIONAL DATA (THOUSANDS $) Revenue backlog, end of period $142,383 $84,614 $142,383 $ 84,614 Construction completed $ 26,529 $26,949 $ 68,738 $ 63,586 Gross profit margin 22.0% 31.2% 23.7% 26.6% SG&A as a % of revenue 17.2% 15.0% 16.9% 16.7% Development expenses as a % of revenue 1.4% 2.4% 2.3% 3.7% Capital expenditures 2,676 $ 105 $ 3,006 $ 1,487 FINANCIAL DATA (THOUSANDS $) Energy service contract revenue $ 40,312 $34,409 $110,087 $101,085 Energy service contract cost 31,444 23,683 83,965 74,236 -------- ------- -------- -------- Gross profit margin 8,868 10,726 26,122 26,849 -------- ------- -------- -------- Selling, general and administrative expenses 6,941 5,158 18,632 16,851 Amortization of goodwill 937 961 2,854 2,939 Depreciation and depletion 535 409 1,485 964 -------- ------- -------- -------- Total expenses 8,413 6,528 22,971 20,754 Equity earnings of nonconsolidated investments 1,019 1,143 5,778 3,567 -------- ------- -------- -------- EBIT $ 1,474 $ 5,341 $ 8,929 $ 9,662 ======== ======= ======== ========
October 31, 2001 -7-