PITTSBURGH, April 26 /PRNewswire-FirstCall/ -- Equitable Resources,
Inc. (NYSE: EQT) today announced first quarter 2007 earnings per diluted
share (EPS) of $0.46. This compares with diluted earnings of $0.59 per
share reported for the first quarter 2006.
Quarterly Results by Business
Equitable Supply
Equitable Supply had operating income for the quarter of $54.9 million,
24% lower than the $72.0 million earned in the same period last year. Total
revenues were $125.3 million, $2.9 million higher than the $122.4 million
reported in 2006. Production revenues were $2.2 million lower than in 2006
as the impact of lower average well-head prices was partially offset by a
5.5% increase in production sales volumes. Gathered volumes and rates were
both higher, driving an increase in gathering revenues over 2006.
Operating expenses for the quarter were $70.4 million compared to $50.5
million last year. Selling, general and administrative expenses were $13.4
million higher. Of the increase, $11.7 million resulted from increased
reserves for certain royalty disputes and other legal expenses.
Depreciation, depletion and amortization expense, gathering and compression
expense and lease operating expense were higher, consistent with higher
overall operating activity levels.
During the quarter, the Company drilled 110 gross operated wells,
compared with 100 wells for the same period in 2006. The Company is on
track to drill 650 gross operated wells in 2007, including at least 50
horizontal wells, a 100% increase from prior estimates.
Equitable Utilities
Equitable Utilities had first quarter operating income of $69.2 million
compared to $61.0 million reported for the same period last year. Overall
net operating revenues were 13% higher at $111.3 million. Distribution net
operating revenues were $61.0 million, 13% higher than last year's $54.1
million, as weather was 12% colder than last year.
Marketing net operating revenues were $32.2 million, $12.5 million
higher than the first quarter 2006, primarily attributable to storage asset
optimization resulting from gas price volatility. Pipeline net operating
revenues decreased by $7.0 million over the first quarter 2006 to $18.1
million. Most of the decrease is associated with the first quarter 2006
recognition of $6.1 million in net operating revenues from prior periods.
Operating expenses increased year over year to $42.1 million from $37.8
million. The increase is primarily attributable to planning expenses for
the acquisition of The Peoples Natural Gas Company and Hope Gas, Inc.,
which totaled $4.9 million in the quarter.
Other Business
Nora Field
On April 13, 2007, Equitable and Range Resources entered into an
agreement to jointly develop the Nora Field in southwestern Virginia. To
equalize ownership interests, Range will pay to Equitable and a newly
formed gathering joint venture owned by the companies, an aggregate of $315
million, subject to customary adjustments. The transaction will reduce
Equitable's 2007 production sales by 3 Bcf thereby reducing the sales
forecast to between 77 and 78 Bcf.
Peoples Gas and Hope Gas Acquisition
On April 13, 2007, the Pennsylvania Public Utility Commission approved
Equitable's acquisition of Peoples Gas. On the same day, the Federal Trade
Commission filed a request for a preliminary injunction, in federal
district court in Pittsburgh, to stop the acquisition. The Company is
challenging this injunction request. The Company is also seeking approval
by the Public Service Commission of West Virginia, for which a hearing is
scheduled for May.
Executive Performance Incentive Programs
The Company has an Executive Performance Incentive Program (EPIP)
designed to align management's long-term incentive compensation to the
absolute and relative returns earned by the Company's shareholders. The
expense of this program, which vests on December 31, 2008, varies based in
part on changes in Equitable's stock price. The significant stock
appreciation in the first quarter resulted in changes to the Company's
assumptions used to calculate EPIP expense. The EPIP expense for the
quarter was $25.5 million, and the estimated expense for 2007 is $49
million, assuming no further changes in assumptions.
Hedging
There was no change to the Company's hedge position during the quarter.
The approximate volumes and prices of Equitable's hedges for 2007 through
2009 are:
Swaps 2007** 2008 2009
Total Volume (Bcf) 42 54 38
Average Price per Mcf (NYMEX)* $4.74 $4.64 $5.90
Collars 2007** 2008 2009
Total Volume (Bcf) 8 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
** April 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
March 31,
2007 2006
Operating income (thousands):
Equitable Supply $54,860 $71,983
Equitable Utilities 69,219 61,022
Unallocated expenses (25,225) (5,348)
Operating Income $98,854 $127,657
The unallocated expenses are primarily due to executive compensation.
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, transmission and distribution. For
information, please visit 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.
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, the Company's
move to a holding company structure, and its pending sale of its interest
in certain gas properties and the related gathering contribution agreement.
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.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
(Thousands except per share amounts)
Three Months Ended
March 31,
2007 2006
Operating revenues $456,546 $430,119
Cost of sales 220,012 208,817
Net operating revenues 236,534 221,302
Operating expenses:
Operation and maintenance 27,444 23,604
Production 16,512 16,119
Selling, general and administrative 66,297 29,705
Depreciation, depletion and
amortization 27,427 24,217
Total operating expenses 137,680 93,645
Operating income 98,854 127,657
Gain on sale of available-for-sale
securities 1,042 -
Equity in earnings of nonconsolidated
investments 109 174
Interest expense 12,280 12,957
Income before income taxes 87,725 114,874
Income taxes 31,107 42,515
Net income $56,618 $72,359
Earnings per share of common stock:
Basic:
Weighted average common shares
outstanding 121,217 119,579
Net income $0.47 $0.61
Diluted:
Weighted average common shares
outstanding 122,757 121,789
Net income $0.46 $0.59
(A) Due to the seasonal nature of the Company's natural gas distribution
and energy marketing business, and the volatility of gas and oil
commodity prices, the interim statements for the three month period
are not indicative of results for a full year.
EQUITABLE SUPPLY
OPERATIONAL AND FINANCIAL REPORT
(UNAUDITED)
Three Months Ended
March 31,
2007 2006
OPERATIONAL DATA
Production:
Total sales volumes (MMcfe) 19,338 18,329
Average (well-head) sales price ($/Mcfe) $4.69 $5.09
Company usage, line loss (MMcfe) 1,078 1,253
Natural gas and oil production (MMcfe) 20,416 19,582
Lease operating expenses excluding
production taxes ($/Mcfe) $0.33 $0.28
Production taxes ($/Mcfe) $0.47 $0.55
Production depletion ($/Mcfe) $0.70 $0.62
Gathering:
Gathered volumes (MMcfe) 29,042 27,282
Average gathering fee ($/Mcfe) $1.10 $0.99
Gathering and compression expense ($/Mcfe) $0.44 $0.36
Gathering and compression
depreciation ($/Mcfe) $0.15 $0.14
(in thousands)
Production operating income $43,947 $62,012
Gathering operating income 10,913 9,971
Total operating income $54,860 $71,983
Production depletion $14,332 $12,137
Gathering and compression
depreciation 4,333 3,767
Other depreciation, depletion and
amortization 1,332 942
Total depreciation, depletion and
amortization $19,997 $16,846
Capital expenditures (thousands) $137,993 $53,912
FINANCIAL DATA (Thousands)
Production revenues $93,287 $95,521
Gathering revenues 31,970 26,928
Total operating revenues 125,257 122,449
Operating expenses:
Lease operating expenses excluding
production taxes 6,815 5,430
Production taxes 9,696 10,689
Gathering and compression 12,824 9,842
Selling, general and administrative 21,065 7,659
Depreciation, depletion and
amortization 19,997 16,846
Total operating expenses 70,397 50,466
Operating income $54,860 $71,983
EQUITABLE UTILITIES
OPERATIONAL AND FINANCIAL REPORT
(UNAUDITED)
Three Months Ended
March 31,
2007 2006
OPERATIONAL DATA
Heating degree days (30-year average:
2,930) 2,848 2,538
Residential sales and transportation
volumes (MMcf) 11,950 10,205
Commercial and industrial volumes
(MMcf) 10,006 9,083
Total throughput (MMcf) -
Distribution 21,956 19,288
Net operating revenues (thousands):
Distribution (regulated)
Residential $41,175 $36,519
Commercial & industrial 17,957 16,079
Other 1,876 1,507
Total Distribution 61,008 54,105
Pipeline (regulated) 18,116 25,069
Marketing 32,153 19,679
Total net operating
revenues $111,277 $98,853
Operating income (thousands):
Distribution (regulated) $29,303 $27,286
Pipeline (regulated) 8,797 14,198
Marketing 31,119 19,538
Total operating income $69,219 $61,022
Capital expenditures (thousands) $19,591 $15,454
FINANCIAL DATA (Thousands)
Distribution revenues (regulated) $210,409 $221,709
Pipeline revenues (regulated) 18,337 25,397
Marketing revenues 128,698 105,397
Less: intrasegment revenues (14,332) (17,805)
Total operating revenues 343,112 334,698
Purchased gas costs 231,835 235,845
Net operating revenues 111,277 98,853
Operating expenses:
Operating and maintenance 14,198 13,615
Selling, general and administrative 20,736 17,062
Depreciation, depletion and
amortization 7,124 7,154
Total operating expenses 42,058 37,831
Operating income $69,219 $61,022
SOURCE Equitable Resources, Inc.
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Related links:
http://www.eqt.com/
CONTACT:
Patrick Kane of Equitable Resources, Inc.,
+1-412-553-7833
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