PITTSBURGH, April 28 /PRNewswire-FirstCall/ -- Equitable Resources, Inc.
(NYSE: EQT) today announced first quarter 2005 earnings per diluted share
(EPS) of $1.23, 12% higher than the $1.10 reported in the first quarter 2004.
Quarterly Results by Business
Equitable Utilities
Equitable Utilities had operating income for the first quarter of $62.4
million compared to $56.0 million reported for the same period last year. Net
operating revenues for the three months ended March 31, 2005 were $99.3
million compared to $93.8 million. The 6% increase in net operating revenues
is mainly due to a $5.6 million increase in margins in the Energy Marketing
Group, primarily attributable to storage asset optimization resulting from
high gas price volatility in the quarter. Commercial and other regulated
services revenues were $2.0 million higher than last year. Weather was
slightly warmer than the first quarter 2004, resulting in a decrease in
distribution revenues of $2.1 million. Total operating expenses for the
quarter were $36.9 million, 2% lower than the $37.8 million reported last
year. Insurance reserves were $1.0 million lower than the first quarter 2004,
bad debt expense was down $0.9 million, and depreciation, depletion and
amortization (DD&A) expense was down $0.7 million. These expense reductions
were partially offset by higher operating costs and higher fringe benefit
costs.
Equitable Supply
Equitable Supply had operating income for the quarter of $65.4 million, 6%
higher than the $61.5 million earned in the same period last year. Total
revenues were $113.3 million, $14.1 million higher than the previous year's
total operating revenue of $99.2 million. Production revenues increased $9.7
million quarter over quarter to $89.1 million in 2005 from $79.4 million in
2004. The revenue increase was a result of both a sales volume increase of
1.3 Bcfe, from the acquisition early in the first quarter of the remaining 99%
interest in Eastern Seven Partners, L.P. (ESP), and an average sales price
increase of $0.24 per Mcfe. Gathering revenues were $4.4 million higher at
$24.2 million, compared with $19.8 million in 2004. The increased gathering
revenue was due to an increase in gathering rates and higher gathered volumes.
Operating expenses for the quarter were $47.9 million compared to $37.7
million last year. One reason for this increase was additional costs of $3.4
million resulting from the purchase of ESP. Excluding the ESP costs, the
increase in total operating expenses was primarily due to increases of $3.0
million in gathering expenses, $1.2 million in production taxes, $1.1 million
in DD&A expense, and $1.0 million in lease operating expenses.
NORESCO
NORESCO reported operating income of $3.7 million in the first quarter
2005, $0.1 million lower than the first quarter 2004. NORESCO's net operating
revenues increased slightly for the quarter to $9.9 million from $9.8 million
reported last year. This was offset by an increase of $0.2 million in
operating expenses, which were $6.2 million compared to $6.0 million in the
first quarter 2004. Net earnings from non-consolidated investments less
minority interest increased by $0.4 million. NORESCO's quarter-end backlog
was $83 million, compared to $118 million a year earlier.
Other Business
2005 Earnings Guidance
The Company is reiterating 2005 earnings guidance of between $3.45 and
$3.50 per diluted share. This guidance excludes the gain from the sale of
Kerr-McGee shares and the costs associated with the move to a new office
building.
Hedging
The approximate volumes and prices of Equitable's hedges for the last nine
months of 2005 through 2007 are:
2005** 2006 2007
Total Volume (Bcf) 47 62 59
Average Price per Mcf (NYMEX)* $4.82 $4.73 $4.75
* 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 290,000 shares of EQT
stock. The total number of shares repurchased since October 1998 is
approximately 19.3 million out of the 21.8 million currently authorized.
Kerr-McGee Corp.
In April, Equitable sold 1,027,859 shares of Kerr-McGee Corp. (NYSE: KMG)
at an average price of $75.80. The sale will result in a gain of $26.7
million that will be reported in the second quarter results. Subsequent to
the sale, Equitable owns 6 million shares of KMG.
Office Consolidation
To consolidate Equitable's administrative operations, the Company entered
into a long-term lease on an office building in the third quarter of 2003.
The relocation process began late in the first quarter of 2005 and will
continue through the second quarter. The Company recognized a loss on
disposal of assets of approximately $0.5 million during the first quarter and
expects to incur additional costs in the second quarter of between $6 and $8
million.
Operating income and earnings from nonconsolidated investments
The Company reports operating income and earnings from 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,
2005 2004
Operating income (thousands):
Equitable Utilities $62,377 $55,960
Equitable Supply 65,353 61,530
NORESCO 3,705 3,786
Unallocated expenses (534) (1,749)
Operating Income $130,901 $119,527
The following table reconciles earnings from nonconsolidated investments
by segment as reported in this press release to the consolidated earnings from
nonconsolidated investments reported in the Company's financial statements:
Three Months
Ended March 31,
2005 2004
Earnings from nonconsolidated
investments (thousands):
Equitable Supply $47 $143
NORESCO 1,178 720
Unallocated 42 38
Total $1,267 $901
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 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.
On May 1 and 2, 2005, Equitable Resources will be making presentations to
securities analysts and/or Equitable shareholders to discuss Equitable's
business, financial results and prospects. A copy of the slides will be
posted on Equitable's website at http://www.eqt.com , under the "Investor" link. In
those presentations, Equitable will make forward looking statements, including
reaffirming earnings guidance for 2005 of $3.45 to $3.50 per diluted share
subject to the exclusions described above.
DISCLOSURES IN THIS PRESS RELEASE CONTAIN FORWARD-LOOKING STATEMENTS
RELATED TO SUCH MATTERS AS 2005 EPS GUIDANCE, EARNINGS PER SHARE AND DIVIDEND
GROWTH, THE APPROXIMATE VOLUMES AND PRICES OF HEDGES FOR 2005 THROUGH 2007,
THE REPURCHASE OF ADDITIONAL COMPANY SHARES, REPAYMENT OF DEBT, THE FORECASTED
CAPITAL EXPENDITURES, THE COMPANY'S APPROACH TO LONG-TERM COMPENSATION,
INCLUDING DEFINED BENEFIT OBLIGATIONS, CHANGES IN OPERATING COSTS, THE ABILITY
OF THE COMPANY TO COLLECT ITS ACCOUNTS RECEIVABLE, OPERATIONAL MATTERS AT THE
SUPPLY SEGMENT INCLUDING THE ANTICIPATED NUMBER OF WELLS TO BE DRILLED, THE
EFFECTIVENESS OF COMPRESSION, AUTOMATION, METERING AND OTHER INFRASTRUCTURE
IMPROVEMENT PROJECTS, ANTICIPATED VOLUMES, STAFFING CHANGES AND THE COMPANY'S
ABILITY TO SEGREGATE THE GATHERING BUSINESS FROM THE PRODUCTION BUSINESS AND
TO RAISE GATHERING RATES, AND REALIZING VALUE FROM THE INVESTMENT IN KERR-
MCGEE, INCLUDING THE EFFECTIVENESS OF HEDGING KERR-MCGEE SHARES. 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, CHANGES IN THE
COMPANY'S 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 AND
ANTICIPATED RATE CASES, THE TIMING AND EXTENT OF THE COMPANY'S SUCCESS IN
ACQUIRING UTILITY COMPANIES AND NATURAL GAS PROPERTIES AND DIVESTING NON-CORE
PRODUCING PROPERTIES AND INTERNATIONAL ASSETS, THE ABILITY OF THE COMPANY TO
DISCOVER, DEVELOP, PRODUCE, GATHER AND MARKET 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, THE PACE AT WHICH THE PERFORMANCE CONTRACTING BUSINESS CAN BE
RESUMED, 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 INCLUDING THE IMPACT OF CHANGES IN THE
RELATIVE PRICE OF EQUITABLE COMMON STOCK, THE ABILITY OF THE COMPANY TO
REALIZE THE VALUE OF ITS KERR-MCGEE STOCK, AND THE LEVEL OF FUTURE SHARE
REPURCHASES BY THE COMPANY. THE COMPANY UNDERTAKES NO OBLIGATION 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,
2005 2004
Operating revenues $439,767 $400,427
Cost of sales 217,293 197,596
Net operating revenues 222,474 202,831
Operating expenses:
Operation and maintenance 23,843 18,698
Production 14,170 10,087
Selling, general and administrative 30,121 32,752
Depreciation, depletion and
amortization 23,439 21,767
Total operating expenses 91,573 83,304
Operating income 130,901 119,527
Earnings from nonconsolidated investments:
International investments 1,159 716
Other 108 185
1,267 901
Other income, net 1,138 -
Minority interest (439) (370)
Interest expense 13,965 12,259
Income before income taxes 118,902 107,799
Income taxes 42,496 37,729
Net income $76,406 $70,070
Earnings per share of common stock:
Basic:
Weighted average common shares outstanding 60,712 62,256
Net income $1.26 $1.13
Diluted:
Weighted average common shares outstanding 62,175 63,531
Net income $1.23 $1.10
(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 UTILITIES
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended
March 31,
2005 2004
OPERATIONAL DATA
Heating degree days (30-year average: 2,930) 2,834 2,925
Residential sales and transportation
volume (MMcf) 12,373 13,080
Commercial and industrial volume (MMcf) 10,783 11,666
Total throughput (MMcf) - Distribution 23,156 24,746
Total throughput (Bbtu) - Pipeline 16,461 18,961
Net Revenues (thousands):
Distribution
Residential $43,161 $44,966
Commercial & industrial 21,242 20,773
Other 2,389 1,564
Pipeline 16,466 16,018
Marketing 16,012 10,445
$99,270 $93,766
Operating expenses as a % of net
operating revenues 37.16% 40.32%
Operating income (thousands):
Distribution $38,327 $37,919
Pipeline 8,419 8,655
Marketing 15,631 9,386
Total $62,377 $55,960
Capital expenditures (thousands) $9,787 $14,600
FINANCIAL DATA (Thousands)
Utility revenues $216,582 $195,689
Marketing revenues 82,486 85,685
Total operating revenues 299,068 281,374
Utility purchased gas costs 133,324 112,368
Marketing purchased gas costs 66,474 75,240
Net operating revenues 99,270 93,766
Operating expenses:
Operating and maintenance 13,946 12,117
Selling, general and administrative 16,315 18,363
Depreciation, depletion and
amortization 6,632 7,326
Total operating expenses 36,893 37,806
Operating income $62,377 $55,960
EQUITABLE SUPPLY
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended
March 31,
2005 2004
OPERATIONAL DATA
Capital expenditures (thousands) (a) $88,631 $21,053
Production:
Total sales volumes (MMcfe) 18,328 17,042
Average (well-head) sales price ($/Mcfe) $4.74 $4.50
Company usage, line loss (MMcfe) 1,231 1,199
Natural gas inventory usage, net (Mmcfe) (51) (112)
Natural gas and oil production (Mmcfe) 19,508 18,129
Lease operating expense excluding
production taxes ($/Mcfe) $0.32 $0.23
Production taxes ($/Mcfe) $0.41 $0.32
Production depletion ($/Mcfe) $0.62 $0.54
Gathering:
Gathered volumes (MMcfe) 33,152 32,568
Average gathering fee ($/Mcfe) $0.73 $0.61
Gathering and compression expense ($/Mcfe) $0.30 $0.20
Gathering and compression
depreciation ($/Mcfe) $0.10 $0.10
(in thousands)
Production operating income $57,283 $54,328
Gathering operating income 8,070 7,202
Total $65,353 $61,530
Production depletion $12,059 $9,822
Gathering and compression depreciation 3,324 3,352
Other depreciation, depletion and
amortization 1,002 869
Total depreciation, depletion and
amortization $16,385 $14,043
FINANCIAL DATA (Thousands)
Production revenues $89,104 $79,429
Gathering revenues 24,171 19,815
Total revenues 113,275 99,244
Operating expenses:
Lease operating expense excluding
production taxes 6,235 4,254
Production taxes (b) 7,935 5,833
Gathering and compression 9,896 6,587
Selling, general and administrative 7,471 6,997
Depreciation, depletion and amortization 16,385 14,043
Total operating expenses 47,922 37,714
Operating income $65,353 $61,530
Earnings from nonconsolidated investment $47 $143
(a) Capital expenditures for the three months ended March 31, 2005
include $57.5 million for the acquisition of the remaining 99%
limited partnership interest in Eastern Seven Partners L.P.
(b) Production taxes include severance and production-related ad valorem
taxes.
NORESCO
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended
March 31,
2005 2004
OPERATIONAL DATA
Revenue backlog, end of period (thousands) $82,511 $118,261
Gross profit margin 25.8% 28.9%
SG&A as a % of revenue 15.5% 17.0%
Capital expenditures (thousands) $217 $28
FINANCIAL DATA (Thousands)
Energy service contract revenues $38,491 $33,926
Energy service contract costs 28,562 24,105
Net operating revenues (gross
profit margin) 9,929 9,821
Operating expenses:
Selling, general and administrative 5,975 5,784
Depreciation and amortization 249 251
Total operating expenses 6,224 6,035
Operating income $3,705 $3,786
Earnings from nonconsolidated investments:
International investments 1,159 716
Other 19 4
Minority interest (439) (370)
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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