Increases Dividend by 27%
PITTSBURGH, April 15 /PRNewswire-FirstCall/ -- Equitable Resources Inc.
(NYSE: EQT) today announced first quarter 2004 income from continuing
operations before cumulative effect of accounting change of $1.10 per diluted
share, 8% higher than the $1.02 reported in the first quarter 2003. The Board
of Directors also announced a 27% dividend increase, the third in five
quarters.
Quarterly Results by Business
Equitable Utilities
Equitable Utilities had operating income for the first quarter of
$56.0 million compared to $59.0 million reported for the same period last
year. Net operating revenues for the three months ended March 31, 2004 were
$93.8 million compared to $97.2 million. The decrease in operating income and
net operating revenues was primarily attributable to weather 6% warmer than
the first quarter 2003. Total operating expenses for the quarter were
$37.8 million, slightly lower than the $38.2 million reported last year.
Equitable Gas Company reached agreement with the Pennsylvania Public
Utility Commission to make participation in the Company's low-income energy
assistance programs more accessible and to improve participants' ability to
pay bills. Beginning April 2, 2004, the Company will collect an additional
$0.30 per Mcf from residential customers to fund the enhanced assistance
program. The surcharge will remain in place until Equitable Gas seeks
authority to change the funding mechanism. The Company is committed to
working with its Utility Commissions to find innovative ways to serve its
customers.
Equitable Supply
Equitable Supply had operating income for the quarter of $61.5 million,
27% higher than the $48.4 million earned in the same period last year. Total
revenues were $99.2 million, $17.5 million higher than the previous year's
total operating revenue of $81.7 million. Production revenues increased
$14.7 million quarter over quarter to $79.4 million in 2004 from $64.7 million
in 2003. The revenue increase was a result of both a sales volume increase of
1.5 Bcfe and an average sales price increase of $0.51 per Mcfe. Gathering
revenues were $2.8 million higher at $19.8 million, compared with
$17.0 million in 2003. The increased gathering revenue was primarily due to
an increase in gathering rates.
Operating expenses for the quarter were $37.7 million compared to
$33.3 million last year. The increase in total operating expenses was due to
increases of $2.5 million in depreciation, depletion and amortization expense
and $1.9 million in other expenses.
NORESCO
NORESCO's net operating revenues increased in the first quarter 2004 to
$9.8 million, compared to $9.4 million in the first quarter 2003. The
increase in revenues was offset by higher selling, general and administrative
expenses resulting in a slight decrease in operating income from $3.9 million
to $3.8 million. NORESCO's quarter-end backlog was $118 million, compared to
$89 million a year earlier.
Other Business
Dividend
On April 14, 2004, the Board of Directors of Equitable Resources declared
a regular quarterly cash dividend of 38 cents per share, payable June 1, 2004
to shareholders of record on May 7, 2004. This represents a 27% increase over
last quarter and the third increase in five quarters. This dividend is 124%
higher than the $0.17 per share paid on March 1, 2003.
2004 Earnings Guidance
The Company reiterates its previously forecast 2004 earnings per share of
between $3.00 and $3.05. Due to significant hedges discussed below, the
impact on 2004 earnings guidance from changes in the price of natural gas is
expected to be approximately $0.01 per share for every $0.10 change in the
NYMEX natural gas price, from $4.50 per MMbtu, and by approximately $0.01 per
100 heating degree days versus normal.
Hedging
The approximate volumes and prices of Equitable's hedges for the last nine
months of 2004 through 2006 are:
2004** 2005 2006
Total Volume (Bcf) 35.7 51.0 51.9
Average Price per Mcf (NYMEX)* $4.62 $4.69 $4.54
* The above price is based on a conversion rate of 1.05 MMbtu/Mcf
** April through December
Stock Buyback
During the quarter, Equitable Resources repurchased 350,000 shares of EQT
stock. The total number of shares repurchased since October 1998 is
approximately 17.0 million. On April 14, 2004, the Board of Directors of
Equitable Resources increased the share purchase authorization by 3 million
shares to 21.8 million.
Westport
Equitable owns approximately 11.5 million shares of Westport Resources
Corporation (NYSE: WRC). On April 7, 2004, Westport announced a merger with
Kerr-McGee Corporation (NYSE: KMG). Westport and Kerr-McGee expect that the
merger will close in the third quarter of 2004. Under the terms of the
agreement, Equitable will receive 0.71 shares of Kerr-McGee for each Westport
share. Equitable expects to own 8.2 million shares of Kerr-McGee at close.
Equitable entered into a voting agreement with Kerr-McGee to vote in favor of
the merger. As part of the agreement, Equitable agreed to refrain from
selling Westport shares through the expected closing date.
Non-GAAP Financial Measures
Operating income and equity in earnings of nonconsolidated investments
The Company reports operating income and equity in earnings of
nonconsolidated investments 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
March 31,
2004 2003
Operating income (thousands):
Equitable Utilities $55,960 $59,027
Equitable Supply 61,530 48,413
NORESCO 3,786 3,921
Unallocated expenses (1,749) (2,041)
Operating Income $119,527 $109,320
The following table reconciles equity in earnings of nonconsolidated
investments by segment as reported in this press release to the consolidated
equity in earnings of nonconsolidated investments reported in the Company's
financial statements:
Three Months Ended
March 31,
2004 2003
Equity in earnings of nonconsolidated investments,
excluding Westport (thousands):
Equitable Supply $143 $239
NORESCO 720 937
Unallocated 38 56
Total $901 $1,232
Other segment non-GAAP 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 replay for a seven day
period.
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.
Equitable Resources management speaks to investors from time to time.
Slides for these discussions will be available online on Equitable's website.
The slides may be updated periodically.
DISCLOSURES IN THIS PRESS RELEASE CONTAIN FORWARD-LOOKING STATEMENTS
RELATED TO SUCH MATTERS AS 2004 EARNINGS PER DILUTED SHARE OF BETWEEN $3.00
AND $3.05, EARNINGS PER SHARE AND DIVIDEND GROWTH, THE IMPACT ON EARNINGS
GUIDANCE OF CHANGES IN NYMEX GAS PRICES AND DEVIATIONS FROM NORMAL WEATHER,
THE APPROXIMATE VOLUMES AND PRICES OF HEDGES FOR 2004 THROUGH 2006, THE
REPURCHASE OF ADDITIONAL COMPANY SHARES, FINANCIAL PERFORMANCE, THE ABILITY OF
THE COMPANY TO COLLECT ITS ACCOUNTS RECEIVABLE, THE EFFECTIVENESS OF THE
COMPANY'S LOW-INCOME ENERGY ASSISTANCE PROGRAMS, THE CAPITAL BUDGET, THE
COMPANY'S ABILITY TO RAISE GATHERING RATES, FUTURE COSTS SAVINGS, OPERATIONAL
MATTERS INCLUDING THE SUCCESS OF THE COMPANY'S DRILLING PROGRAM AND
EFFECTIVENESS OF AUTOMATION AND METERING, THE TIMING AND PASSAGE OF FEDERAL
ENABLING LEGISLATION FOR PERFORMANCE CONTRACTING WORK, REALIZING VALUE FROM
THE INVESTMENT IN WESTPORT RESOURCES AND THE ANTICIPATED CLOSING OF THE
ANNOUNCED WESTPORT/KERR-MCGEE MERGER. 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, GROWTH AND RESULTS OF THE COMPANY'S BUSINESS INCLUDE,
BUT ARE NOT LIMITED TO, THE FOLLOWING: WEATHER CONDITIONS, COMMODITY PRICES
FOR NATURAL GAS AND ASSOCIATED HEDGING ACTIVITIES, INCLUDING CHANGES IN HEDGE
POSITIONS, AVAILABILITY AND COST OF FINANCING, THE ABILITY TO MAINTAIN THE
COMPANY'S CURRENT CREDIT RATINGS, CHANGES IN INTEREST RATES, CHANGES IN TAX
LAWS, UNANTICIPATED CURTAILMENTS OR DISRUPTIONS IN PRODUCTION, TIMING AND
AVAILABILITY OF REGULATORY AND GOVERNMENTAL APPROVALS, INCLUDING PENDING RATE
CASES, THE TIMING AND EXTENT OF THE COMPANY'S SUCCESS IN ACQUIRING UTILITY
COMPANIES AND NATURAL GAS PROPERTIES, THE ABILITY OF THE COMPANY TO DISCOVER,
DEVELOP AND PRODUCE RESERVES, THE ABILITY OF THE COMPANY TO ACQUIRE AND APPLY
TECHNOLOGY TO ITS OPERATIONS, THE IMPACT OF COMPETITIVE FACTORS ON PROFIT
MARGINS IN VARIOUS MARKETS IN WHICH THE COMPANY COMPETES, CHANGES IN GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND/OR THEIR INTERPRETATION, THE ABILITY OF
THE COMPANY TO NEGOTIATE LABOR CONTRACTS, THE AMOUNT OF INCENTIVE PLAN
ACCRUALS, REALIZING THE VALUE OF WESTPORT, AND THE LEVEL OF FUTURE SHARE
REPURCHASES BY THE COMPANY.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
(Thousands except per share amounts)
Three Months Ended
March 31,
2004 2003
Operating revenues $400,427 $342,322
Cost of sales 197,596 153,970
Net operating revenues 202,831 188,352
Operating expenses:
Operation and maintenance 18,698 18,855
Production and exploration 10,087 9,162
Selling, general and administrative 32,752 32,262
Depreciation, depletion and amortization 21,767 18,753
Total operating expenses 83,304 79,032
Operating income 119,527 109,320
Charitable foundation contribution - (9,279)
Equity in earnings of nonconsolidated investments:
Westport - 3,614
Other 901 1,232
901 4,846
Minority interest (370) (871)
Interest expense 12,259 12,321
Income from continuing operations before
income taxes and cumulative effect of
accounting change 107,799 91,695
Income taxes 37,729 27,216
Income from continuing operations before
cumulative effect of accounting change 70,070 64,479
Cumulative effect of accounting change,
net of tax - (3,556)
Net income $70,070 $60,923
Earnings per share of common stock:
Basic:
Weighted average common shares outstanding 62,256 62,063
Income from continuing operations before
cumulative effect of accounting change $1.13 $1.04
Cumulative effect of accounting change,
net of tax - (0.06)
Net income $1.13 $0.98
Diluted:
Weighted average common shares outstanding 63,531 63,333
Income from continuing operations before
cumulative effect of accounting change $1.10 $1.02
Cumulative effect of accounting change,
net of tax - (0.06)
Net income $1.10 $0.96
(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 month periods
are not indicative of results for a full year.
EQUITABLE UTILITIES
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended
March 31,
2004 2003
OPERATIONAL DATA
Heating degree days (30-year average: 2,930) 2,925 3,115
Residential sales and transportation
volume (MMcf) 13,080 14,165
Commercial and industrial volume (MMcf) 11,666 11,590
Total throughput (MMcf) - Distribution 24,746 25,755
Total throughput (MMbtu) - Pipeline 18,961 20,428
Total throughput (MMbtu) - Marketing 21,934 14,157
Net operating revenues (thousands):
Distribution:
Residential $44,966 $48,146
Commercial & industrial 20,773 21,481
Other 1,564 1,566
Pipeline 16,018 15,913
Marketing 10,445 10,113
$93,766 $97,219
Operating expenses as a % of net
operating revenues 40.32% 39.28%
Operating income (thousands):
Distribution $37,919 $40,815
Pipeline 8,655 8,533
Marketing 9,386 9,679
Total $55,960 $59,027
Capital expenditures (thousands) $14,600 $8,668
FINANCIAL DATA (Thousands)
Utility revenues (regulated) $195,689 $184,325
Marketing revenues 85,685 51,784
Total operating revenues 281,374 236,109
Utility purchased gas costs (regulated) 112,368 97,219
Marketing purchased gas costs 75,240 41,671
Net operating revenues 93,766 97,219
Operating expenses:
Operating and maintenance expense 12,117 13,103
Selling, general and administrative expense 18,363 18,354
Depreciation, depletion and amortization 7,326 6,735
Total operating expenses 37,806 38,192
Operating income $55,960 $59,027
EQUITABLE SUPPLY
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended
March 31,
2004 2003
OPERATIONAL DATA
Capital expenditures (thousands) (a) $21,053 $67,738
Production:
Total sales volumes (MMcfe) 17,042 15,517
Average (well-head) sales price ($/Mcfe) $4.50 $3.99
Company usage, line loss (MMcfe) 1,199 1,057
Natural gas inventory usage, net (MMcfe) (112) -
Natural gas and oil production (MMcfe) 18,129 16,574
Operated volumes-third parties (MMcfe) 5,355 5,782
Lease operating expense, excluding severance
tax ($/Mcfe) $0.34 $0.32
Severance tax ($/Mcfe) $0.22 $0.23
Production depletion ($/Mcfe) $0.54 $0.48
Gathering:
Gathered volumes (MMcfe) 32,568 32,552
Average gathering fee ($/Mcfe) $0.61 $0.52
Gathering and compression expense ($/Mcfe) $0.20 $0.18
Gathering and compression depreciation ($/Mcfe) $0.10 $0.09
(in thousands)
Production operating income $54,328 $42,607
Gathering operating income 7,202 5,806
Total $61,530 $48,413
Production depletion $9,822 $7,955
Gathering and compression depreciation 3,352 2,907
Other depreciation, depletion and amortization 869 720
Total depreciation, depletion and
amortization $14,043 $11,582
FINANCIAL DATA (Thousands)
Production revenues $79,429 $64,679
Gathering revenues 19,815 17,018
Total revenues 99,244 81,697
Operating expenses:
Lease operating expense, excluding severance
taxes 6,085 5,275
Severance tax 4,002 3,887
Gathering and compression expense 6,587 5,752
Selling, general and administrative 6,997 6,788
Depreciation, depletion and amortization 14,043 11,582
Total operating expenses 37,714 33,284
Operating income $61,530 $48,413
Equity in earnings of nonconsolidated investments $143 $239
Minority interest $- $(871)
(a) 2003 amount includes the purchase of the remaining 31% limited
partnership interest in ABP ($44.2 million).
NORESCO
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended
March 31,
2004 2003
OPERATIONAL DATA
Revenue backlog, end of period (thousands) $118,261 $88,992
Gross profit margin 28.9% 20.7%
SG&A as a % of revenue 17.0% 11.4%
Capital expenditures (thousands) $28 $48
FINANCIAL DATA (Thousands)
Energy service contract revenues $33,926 $45,518
Energy service contract costs 24,105 36,082
Net operating revenues (gross profit margin) 9,821 9,436
Operating expenses:
Selling, general and administrative expenses 5,784 5,166
Depreciation and depletion 251 349
Total operating expenses 6,035 5,515
Operating income $3,786 $3,921
Equity in earnings of nonconsolidated investments $720 $937
Minority Interest $(370) $-
Equitable Resources' recent news releases are available on the Internet
at http://www.eqt.com
SOURCE Equitable Resources Inc.
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