PITTSBURGH, July 27 /PRNewswire-FirstCall/ -- Equitable Resources, Inc.
(NYSE: EQT) today announced second quarter 2006 earnings per diluted share
(EPS) of $0.36, compared with $0.52 reported in the second quarter 2005.
The second quarter 2005 results were dominated by a gain on the sale of
Kerr-McGee shares.
Quarterly Results by Business
Equitable Utilities
Equitable Utilities had operating income for the second quarter of
$13.9 million compared to $5.7 million reported for the same period last
year. Net operating revenues were $45.8 million compared to $42.1 million
in 2005, as higher Pipeline and Marketing net revenues more than offset
lower Distribution net revenues.
Total operating expenses for the quarter decreased by $4.5 million from
$36.4 million in 2005 to $31.9 million in 2006. During the quarter, the
Company reversed $2.4 million of a $3.8 million second quarter 2005 charge
for office relocations. Other operating expense increases included $2.7
million of costs associated with planning for the integration of Peoples
Gas and Hope Gas, a $0.7 million increase in gathering operating expense
and a $0.6 million increase in post retirement benefit costs. Major items
partially offsetting these increases were a $1.9 million reduction in bad
debt and the absence in 2006 of a $0.8 million severance charge in the
second quarter 2005.
Equitable Supply
Equitable Supply's operating income for the 2006 second quarter totaled
$65.4 million, 3.6% higher than the $63.2 million earned in the same period
last year. Total operating revenues were $119.3 million, $7.1 million
higher than the previous year's total of $112.2 million. Production sales
volumes increased by 0.6 Bcfe to 19.1 Bcfe as volumes from new wells more
than offset the 0.6 Bcfe from wells sold in May 2005. Excluding property
dispositions, sales volumes were up by 6.7%. Partially offsetting revenues
from higher sales volumes was a 1.3% reduction in average sales price. The
Company expects to sell between 76 and 77 Bcfe of natural gas in 2006.
Gathering revenues were $26.7 million, $4.2 million higher than the
second quarter 2005 as the average gathering fee increased by 29.5% to
$1.01 per Mcfe. Gathered volumes declined by 2.7 Bcfe or 9.3%, primarily
due to the transfer of certain regulated gathering facilities to Equitable
Utilities for segment reporting purposes and the sale of non-core gathering
assets in May 2005. These factors were partially offset by increased
gathered volumes for Equitable Supply production in the quarter.
Total operating expenses for the 2006 second quarter totaled $53.9
million compared to $49.0 million in the 2005 second quarter. Higher SG&A
expense, depreciation, depletion and amortization expense and production
taxes account for most of the increase in operating expenses.
The Company drilled 142 wells in the second quarter for a total of 275
wells in the first half of 2006.
Other Business
Hedging
During the quarter, the Company increased its collar position for years
2007 - 2012. The approximate volumes and prices of Equitable's hedges for
the last six months of 2006 through 2008 are:
Swaps 2006** 2007 2008
Total Volume (Bcf) 30 56 54
Average Price per Mcf (NYMEX)* $4.77 $4.74 $4.64
Collars 2006** 2007 2008
Total Volume (Bcf) 4 10 10
Average Floor Price per Mcf (NYMEX)* $7.35 $7.61 $7.61
Average Cap Price per Mcf (NYMEX)* $10.84 $11.27 $11.27
* The above price is based on a conversion rate of 1.05 MMbtu/Mcf
** July 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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Operating income (thousands):
Equitable Utilities $13,867 $5,682 $74,889 $68,059
Equitable Supply 65,443 63,170 137,426 128,523
Unallocated expenses (5,191) (15,393) (10,539) (15,927)
Operating Income $74,119 $53,459 $201,776 $180,655
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 supply, transmission and distribution. For
information please visit http://www.eqt.com.
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 program, production
volumes, sales volumes, capital expenditures and earnings and the pending
acquisition of Peoples Gas and Hope Gas and the financing of that
acquisition. 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
Form 10-K for the year ended December 31, 2005.
Any forward-looking statement speaks only as of the date on which such
statement is made and 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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Operating revenues $251,207 $230,194 $681,326 $631,470
Cost of sales 86,113 75,917 294,930 264,648
Net operating revenues 165,094 154,277 386,396 366,822
Operating expenses:
Operation and maintenance 25,366 24,865 48,970 48,708
Production 15,670 15,026 31,789 29,196
Selling, general and
administrative 28,050 30,492 57,755 54,119
Office consolidation impairment
charges (2,908) 7,316 (2,908) 7,835
Depreciation, depletion and
amortization 24,797 23,119 49,014 46,309
Total operating expenses 90,975 100,818 184,620 186,167
Operating income 74,119 53,459 201,776 180,655
Gain on sale and tender of
available-for-sale securities,
net - 60,819 - 60,819
Equity in earnings of
nonconsolidated investments (124) 108 50 197
Other income, net - 57 - 1,195
Interest expense 9,995 9,988 22,952 22,175
Income from continuing operations
before income taxes 64,000 104,455 178,874 220,691
Income taxes 20,091 46,502 62,606 87,947
Income from continuing operations 43,909 57,953 116,268 132,744
Income from discontinued
operations, net of tax of $1,433
and $2,484 for the three and six
months ended June 30, 2005,
respectively - 6,366 - 7,981
Net income $43,909 $64,319 $116,268 $140,725
Earnings per share of common
stock:
Basic:
Weighted average common shares
outstanding 120,128 121,472 119,823 121,472
Income from continuing operations $0.37 $0.48 $0.97 $1.09
Income from discontinued
operations - 0.05 - 0.07
Net income $0.37 $0.53 $0.97 $1.16
Diluted:
Weighted average common shares
outstanding 122,044 123,990 121,899 124,186
Income from continuing operations $0.36 $0.47 $0.95 $1.07
Income from discontinued
operations - 0.05 - 0.06
Net income $0.36 $0.52 $0.95 $1.13
(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 six month
periods are not indicative of results for a full year.
EQUITABLE UTILITIES
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
OPERATIONAL DATA
Heating degree days (30-year
average: Qtr - 705; YTD - 3,635) 565 597 3,103 3,431
Residential sales and transportation
volume (MMcf) 2,656 3,173 12,861 15,546
Commercial and industrial volume
(MMcf) 4,667 4,322 13,750 15,105
Total throughput (MMcf) -
Distribution 7,323 7,495 26,611 30,651
Net Operating revenues (thousands):
Distribution (regulated)
Residential $16,648 $17,754 $53,167 $60,915
Commercial & industrial 6,589 7,408 22,668 28,650
Other 1,697 2,128 3,204 4,517
Total distribution operations 24,934 27,290 79,039 94,082
Pipeline (regulated) 13,868 10,498 38,937 26,964
Marketing 6,965 4,280 26,644 20,292
Total $45,767 $42,068 $144,620 $141,338
Operating expenses as a % of net
operating revenues 69.70% 86.49% 48.22% 51.85%
Operating income (thousands):
Distribution (regulated) $2,285 $933 $29,571 $39,260
Pipeline (regulated) 5,150 835 19,348 9,254
Marketing 6,432 3,914 25,970 19,545
Total $13,867 $5,682 $74,889 $68,059
Capital expenditures (thousands) $13,626 $11,786 $29,080 $21,573
FINANCIAL DATA (Thousands)
Distribution revenues (regulated) $61,594 $66,141 $283,303 $269,871
Pipeline revenues (regulated) 14,239 10,498 39,636 26,964
Marketing revenues 75,840 71,243 181,237 167,348
Less: intrasegment revenues (12,646) (9,978) (30,451) (27,211)
Total operating revenues 139,027 137,904 473,725 436,972
Purchased gas costs 93,260 95,836 329,105 295,634
Net operating revenues 45,767 42,068 144,620 141,338
Operating expenses:
Operating and maintenance 14,642 14,571 28,257 28,517
Selling, general and administrative 12,483 11,234 29,545 27,549
Office consolidation impairment
charges (2,396) 3,841 (2,396) 3,841
Depreciation, depletion and
amortization 7,171 6,740 14,325 13,372
Total operating expenses 31,900 36,386 69,731 73,279
Operating income $13,867 $5,682 $74,889 $68,059
EQUITABLE SUPPLY
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
OPERATIONAL DATA
Capital expenditures (thousands) $68,615 $59,182 $122,527 $147,813
Production:
Total sales volumes (MMcfe) 19,115 18,494 37,444 36,822
Average (well-head) sales price
($/Mcfe) $4.71 $4.77 $4.90 $4.76
Company usage, line loss (MMcfe) 1,266 1,116 2,519 2,347
Natural gas inventory usage, net
(MMcfe) - - - (51)
Natural gas and oil production
(MMcfe) 20,381 19,610 39,963 39,118
Lease operating expense excluding
production taxes ($/Mcfe) $0.31 $0.33 $0.30 $0.33
Production taxes ($/Mcfe) $0.46 $0.44 $0.50 $0.42
Production depletion ($/Mcfe) $0.62 $0.60 $0.62 $0.61
Gathering:
Gathered volumes (MMcfe) 26,268 28,960 53,550 62,112
Average gathering fee ($/Mcfe) $1.01 $0.78 $1.00 $0.75
Gathering and compression expense
($/Mcfe) $0.40 $0.36 $0.38 $0.33
Gathering and compression
depreciation ($/Mcfe) $0.15 $0.12 $0.14 $0.11
(in thousands)
Production operating income $56,655 $58,154 $118,667 $115,437
Gathering operating income 8,788 5,016 18,759 13,086
Total $65,443 $63,170 $137,426 $128,523
Production depletion $12,594 $11,840 $24,731 $23,899
Gathering and compression
depreciation 3,821 3,401 7,588 6,725
Other depreciation, depletion and
amortization 1,034 950 1,976 1,952
Total depreciation, depletion and
amortization $17,449 $16,191 $34,295 $32,576
FINANCIAL DATA (Thousands)
Production revenues $92,671 $89,712 $188,192 $178,816
Gathering revenues 26,656 22,497 53,584 46,668
Total revenues 119,327 112,209 241,776 225,484
Operating expenses:
Lease operating expense excluding
production taxes 6,360 6,481 11,790 12,716
Production taxes 9,310 8,545 19,999 16,480
Gathering and compression 10,582 10,301 20,424 20,197
Selling, general and administrative 10,183 7,521 17,842 14,473
Office consolidation impairment
charges - - - 519
Depreciation, depletion and
amortization 17,449 16,191 34,295 32,576
Total operating expenses 53,884 49,039 104,350 96,961
Operating income $65,443 $63,170 $137,426 $128,523
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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