EX-99.1 2 a07-27196_2ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Contact:   Patrick Kane

412-553-7833

 

 

Equitable Resources Reports Third Quarter Earnings

 

PITTSBURGH, October 25, 2007/ PRNewswire-FirstCall/ — Equitable Resources, Inc. (NYSE: EQT) today announced third quarter 2007 earnings of $0.27 per diluted share on net income of $32.9 million.  This compares with diluted earnings of $0.26 per share on net income of $31.8 million in the third quarter of 2006.

 

Quarterly Results by Business

 

Equitable Supply

 

Equitable Supply had operating income for the quarter of $62.2 million, slightly lower than the $63.2 million earned in the same period last year.  Production revenues were $93.4 million, essentially unchanged from the third quarter 2006 as slightly lower reported volumes were offset by a higher average well-head price.  Production sales volumes decreased by 0.5 Bcfe to 19.0 Bcfe as volumes from new wells were more than offset by 1.2 Bcfe from wells sold in the second quarter of 2007 and by normal declines.  The average well-head sales price increased by 3% to $4.78 per Mcfe.

 

Gathering operating income was $6.3 million, $3.2 million lower than the third quarter 2006.  The decrease in operating income was a result of the gathering asset contribution to Nora Gathering, LLC.  Gathered volumes, gathering revenues and gathering-related expenses related to the Nora Field gathering activities are no longer included in Equitable Supply’s operating results.  The Company reported Equity in Earnings of $1.3 million from its ownership in Nora Gathering, LLC.

 

Total operating expenses for the 2007 third quarter totaled $55.0 million compared to $57.8 million in the 2006 third quarter.  The decrease is primarily attributable to lower expenses due to the Nora Field transaction and lower selling, general and administrative expenses related to reserves established in the third quarter 2006 for royalty disputes and legal expenses, partially offset by higher depreciation, depletion and amortization.

 

Equitable Utilities

 

Equitable Utilities had operating income for the third quarter of $4.1 million compared to $4.0 million reported for the same period last year.  Net operating revenues for the three months ended September 30, 2007 were $40.9 million compared to $39.7 million for the same period last year, as higher Marketing net revenues resulting from storage optimization were partially offset by lower distribution and pipeline net revenues.

 

Total operating expenses for the quarter were $36.8 million, $1.1 million higher than the $35.7 million reported during the same period last year.  Increases in general overhead and operating and maintenance costs were partially offset by a reduction of expenses incurred in connection with the transition planning for the pending acquisition of Peoples Natural Gas and Hope Gas.  Equitable incurred $1.3 million of costs associated with transition planning for Peoples and Hope in the quarter, $2.4 million less than in the third quarter of 2006.

 


 

Other Business

 

Roaring Fork Field

In September 2007, the Company purchased 12.3 Bcf of proved reserves in the Equitable operated Roaring Fork Field in Virginia, consisting of approximately 10.1 Bcf of proved developed reserves and approximately 2.2 Bcf of proved undeveloped reserves, for $28.5 million.  The purchase increased the Company’s working interest by 13.5% to approximately 97.0%.

 

Hedging

 

There was no change to the Company’s hedge position during the quarter.  The approximate volumes and prices of Equitable’s hedges for the last three months of 2007 through 2009 are:

 

 

 

2007**

 

2008

 

2009

 

Swaps

 

 

 

 

 

 

 

Total Volume (Bcf)

 

13

 

50

 

37

 

Average Price per Mcf (NYMEX)*

 

$

4.72

 

$

4.62

 

$

5.91

 

 

 

 

 

 

 

 

 

Collars

 

 

 

 

 

 

 

Total Volume (Bcf)

 

3

 

10

 

10

 

Average Floor Price per Mcf (NYMEX)*

 

$

7.61

 

$

7.61

 

$

7.61

 

Average Cap Price per Mcf (NYMEX)*

 

$

11.27

 

$

11.27

 

$

11.27

 

 

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

**October through December

 

Operating Income

 

The Company reports operating income by segment in this press release.  Both interest and income taxes are controlled on a consolidated, corporate-wide basis, and are not allocated to the segments.

 

The following table reconciles operating income by segment as reported in this press release to the consolidated operating income reported in the Company’s financial statements:

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

Operating income (thousands):

 

 

 

 

 

 

 

 

 

Equitable Supply

 

$

62,166

 

$

63,230

 

$

188,203

 

$

200,656

 

Equitable Utilities

 

4,107

 

3,969

 

84,185

 

78,858

 

Unallocated expenses

 

(8,905

)

(6,064

)

(54,647

)

(16,603

)

Operating Income

 

$

57,368

 

$

61,135

 

$

217,741

 

$

262,911

 

 

Other segment financial measures identified in this press release are reconciled to the most comparable financial measures calculated in accordance with GAAP on the attached operational and financial reports.

 

Equitable’s teleconference with securities analysts, which begins at 10:30 a.m. Eastern Time today, will be broadcast live via Equitable’s website, http://www.eqt.com, and will be available for seven days.

 

Equitable Resources is an integrated energy company with emphasis on Appalachian area natural gas supply, gathering, processing, transmission and distribution.  For information, please visit Equitable’s website, http://www.eqt.com.

 

Equitable Resources management speaks to investors from time to time.  Slides for these discussions will be available online via Equitable’s website.  The slides are updated periodically.

 

 

 

2


 

Forward-Looking Statements

 

Disclosures in this press release contain forward-looking statements.  Statements that do not relate strictly to historical or current facts are forward-looking.  Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include 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 programs and initiatives, infrastructure projects, production and sales volumes, marketing revenues and margins, executive compensation, capital expenditures, the pending acquisition of The Peoples Natural Gas Company and Hope Gas, Inc. and the financing of that acquisition and the Company’s move to a holding company structure.  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” of the Company’s most recently filed Form 10-K.

 

Any forward-looking statement speaks only as of the date on which such statement is made and the Company does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

 

 

 

3


 

EQUITABLE RESOURCES, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)

(Thousands except per share amounts)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

226,806

 

$

232,801

 

$

976,592

 

$

914,127

 

Cost of sales

 

68,722

 

72,155

 

405,687

 

367,085

 

Net operating revenues

 

158,084

 

160,646

 

570,905

 

547,042

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Operation and maintenance

 

25,602

 

25,282

 

78,614

 

74,252

 

Production

 

16,009

 

16,176

 

48,646

 

47,965

 

Selling, general and administrative

 

32,198

 

32,904

 

143,978

 

90,659

 

Office consolidation impairment charges

 

—

 

—

 

—

 

(2,908

)

Depreciation, depletion and amortization

 

26,907

 

25,149

 

81,926

 

74,163

 

Total operating expenses

 

100,716

 

99,511

 

353,164

 

284,131

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

57,368

 

61,135

 

217,741

 

262,911

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of assets, net

 

—

 

—

 

119,401

 

—

 

 

 

 

 

 

 

 

 

 

 

Other income

 

2,204

 

489

 

5,530

 

886

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of nonconsolidated investments

 

1,423

 

70

 

2,198

 

120

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

11,557

 

12,779

 

35,604

 

36,128

 

Income before income taxes

 

49,438

 

48,915

 

309,266

 

227,789

 

Income taxes

 

16,513

 

17,120

 

112,380

 

79,726

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

32,925

 

$

31,795

 

$

196,886

 

$

148,063

 

 

 

 

 

 

 

 

 

 

 

Earnings per share of common stock:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

121,380

 

120,172

 

121,319

 

119,929

 

Net income

 

$

0.27

 

$

0.26

 

$

1.62

 

$

1.23

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

122,838

 

122,103

 

122,818

 

121,961

 

Net income

 

$

0.27

 

$

0.26

 

$

1.60

 

$

1.21

 

 

(A)           Due to the seasonal nature of the Company’s natural gas distribution and energy marketing business, 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.

 

 

4


 

EQUITABLE SUPPLY

OPERATIONAL AND FINANCIAL REPORT

(UNAUDITED)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

OPERATIONAL DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas and oil production (MMcfe)

 

20,636

 

20,852

 

62,076

 

60,815

 

Company usage, line loss (MMcfe)

 

(1,684

)

(1,410

)

(4,383

)

(3,929

)

Total sales volumes (MMcfe)

 

18,952

 

19,442

 

57,693

 

56,886

 

Average (well-head) sales price ($/Mcfe)

 

$

4.78

 

$

4.66

 

$

4.85

 

$

4.82

 

 

 

 

 

 

 

 

 

 

 

Lease operating expense excluding production taxes ($/Mcfe)

 

$

0.34

 

$

0.32

 

$

0.33

 

$

0.30

 

Production taxes ($/Mcfe)

 

$

0.44

 

$

0.45

 

$

0.46

 

$

0.48

 

Production depletion ($/Mcfe)

 

$

0.70

 

$

0.62

 

$

0.70

 

$

0.62

 

 

 

 

 

 

 

 

 

 

 

Gathering:

 

 

 

 

 

 

 

 

 

Gathered volumes (MMcfe)

 

20,352

 

26,723

 

73,462

 

80,273

 

Average gathering fee ($/Mcfe)

 

$

1.17

 

$

1.05

 

$

1.12

 

$

1.02

 

Gathering and compression expense ($/Mcfe)

 

$

0.54

 

$

0.42

 

$

0.48

 

$

0.39

 

Gathering and compression depreciation ($/Mcfe)

 

$

0.17

 

$

0.14

 

$

0.16

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 (in thousands)

 

 

 

 

 

 

 

 

 

Production operating income

 

$

55,885

 

$

53,690

 

$

163,109

 

$

172,357

 

Gathering operating income

 

6,281

 

9,540

 

25,094

 

28,299

 

Total operating income

 

$

62,166

 

$

63,230

 

$

188,203

 

$

200,656

 

 

 

 

 

 

 

 

 

 

 

Production depletion

 

$

14,440

 

$

12,888

 

$

43,509

 

$

37,619

 

Gathering and compression depreciation

 

3,496

 

3,811

 

11,723

 

11,399

 

Other depreciation, depletion and amortization

 

1,445

 

1,083

 

4,246

 

3,059

 

Total depreciation, depletion and amortization

 

$

19,381

 

$

17,782

 

$

59,478

 

$

52,077

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures (thousands)

 

$

175,012

 

$

82,580

 

$

470,486

 

$

204,961

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL DATA (Thousands)

 

 

 

 

 

 

 

 

 

Production revenues

 

$

93,428

 

$

92,949

 

$

287,669

 

$

281,141

 

Gathering revenues

 

23,726

 

28,042

 

82,626

 

81,626

 

Total operating revenues

 

117,154

 

120,991

 

370,295

 

362,767

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Lease operating expenses excluding production taxes

 

6,949

 

6,753

 

20,235

 

18,543

 

Production taxes

 

9,060

 

9,423

 

28,411

 

29,422

 

Gathering and compression

 

10,891

 

11,123

 

35,512

 

31,547

 

Selling, general and administrative

 

8,707

 

12,680

 

38,456

 

30,522

 

Depreciation, depletion and amortization

 

19,381

 

17,782

 

59,478

 

52,077

 

Total operating expenses

 

54,988

 

57,761

 

182,092

 

162,111

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

62,166

 

$

63,230

 

$

188,203

 

$

200,656

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of assets, net

 

$

—

 

$

—

 

$

119,401

 

$

—

 

Equity in earnings of nonconsolidated investments

 

$

1,379

 

$

71

 

$

2,085

 

$

53

 

 

 

5


 

EQUITABLE UTILITIES

OPERATIONAL AND FINANCIAL REPORT

(UNAUDITED)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

OPERATIONAL DATA

 

 

 

 

 

 

 

 

 

Heating degree days (30-year average: Qtr: 124; YTD: 3,759)

 

65

 

123

 

3,530

 

3,226

 

 

 

 

 

 

 

 

 

 

 

Residential sales and transportation volumes (MMcf)

 

1,284

 

1,307

 

16,535

 

14,168

 

Commercial and industrial volumes (MMcf)

 

3,903

 

4,109

 

19,541

 

17,859

 

Total throughput (MMcf) - Distribution

 

5,187

 

5,416

 

36,076

 

32,027

 

 

 

 

 

 

 

 

 

 

 

Net operating revenues (thousands):

 

 

 

 

 

 

 

 

 

Distribution

 

 

 

 

 

 

 

 

 

Residential

 

$

12,017

 

$

11,887

 

$

72,285

 

$

65,054

 

Commercial & industrial

 

5,693

 

7,026

 

31,203

 

29,694

 

Other

 

1,901

 

2,487

 

5,892

 

5,691

 

Total Distribution

 

19,611

 

21,400

 

109,380

 

100,439

 

Pipeline

 

14,216

 

15,377

 

46,659

 

54,314

 

Marketing

 

7,103

 

2,878

 

44,571

 

29,522

 

Total net operating revenues

 

$

40,930

 

$

39,655

 

$

200,610

 

$

184,275

 

 

 

 

 

 

 

 

 

 

 

Operating income (thousands):

 

 

 

 

 

 

 

 

 

Distribution (regulated)

 

$

(6,674

)

$

(4,043

)

$

23,587

 

$

25,528

 

Pipeline (regulated)

 

4,443

 

5,595

 

18,363

 

24,943

 

Marketing

 

6,338

 

2,417

 

42,235

 

28,387

 

Total operating income

 

$

4,107

 

$

3,969

 

$

84,185

 

$

78,858

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures (thousands)

 

$

23,200

 

$

16,265

 

$

61,104

 

$

45,094

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL DATA (Thousands)

 

 

 

 

 

 

 

 

 

Distribution revenues (regulated)

 

$

37,467

 

$

39,330

 

$

319,436

 

$

322,633

 

Pipeline revenues (regulated)

 

14,777

 

15,782

 

48,063

 

55,418

 

Marketing revenues

 

86,777

 

81,477

 

312,425

 

262,714

 

Less: intrasegment revenues

 

(11,028

)

(10,986

)

(36,707

)

(41,437

)

Total operating revenues

 

127,993

 

125,603

 

643,217

 

599,328

 

 

 

 

 

 

 

 

 

 

 

Purchased gas costs

 

87,063

 

85,948

 

442,607

 

415,053

 

Net operating revenues

 

40,930

 

39,655

 

200,610

 

184,275

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Operating and maintenance

 

14,754

 

14,037

 

43,238

 

42,294

 

Selling, general and administrative

 

14,925

 

14,494

 

51,727

 

44,039

 

Office consolidation impairment charges

 

—

 

—

 

—

 

(2,396

)

Depreciation, depletion and amortization

 

7,144

 

7,155

 

21,460

 

21,480

 

Total operating expenses

 

36,823

 

35,686

 

116,425

 

105,417

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

4,107

 

$

3,969

 

$

84,185

 

$

78,858

 

 

 

6