[EQT] Must have been an erroneous quote. But ...
UPDATE 1-Equitable Resources 3rd-qtr earnings rise
Thu Oct 27, 2005 07:33 AM ET
(adds details)
NEW YORK, Oct 27 (Reuters) - Equitable Resources Inc. (EQT.N: Quote, Profile, Research) , a supplier of natural gas, on Thursday posted higher third-quarter earnings.
The Pittsburgh-based company said net income rose to $46.5 million, or 38 cents per share, from $35.7 million, or 28 cents per share, in the year-ago quarter. Equitable split its stock two-for-one earlier this year.
Analysts on average expected a profit of 34 cents a share, according to Reuters Estimates.
The company also reiterated its earnings forecast for the year of between $2.15 and $2.18 per share.
Analysts on average expected a profit of $1.76 a share, according to Reuters Estimates.
Operating revenues in the quarter jumped to $301.5 million from $205.8 million a year earlier.
biz.yahoo.com
Press Release Source: Equitable Resources, Inc.
Equitable Resources Reports Earnings of $0.38 per Share
Thursday October 27, 7:00 am ET
PITTSBURGH, Oct. 27 /PRNewswire-FirstCall/ -- Equitable Resources, Inc. (NYSE: EQT - News) today announced third quarter 2005 earnings of $0.38 per diluted share. This compares with diluted earnings of $0.28 per share in the third quarter 2004. In the quarter, the Company recognized a $19.4 million gain on the sale of approximately 0.4 million shares of Kerr-McGee Corporation (KMG) and a $12.7 million pension settlement expense.
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Quarterly Results by Business
Equitable Utilities
Equitable Utilities had an operating loss for the third quarter of $7.5 million compared to $3.7 million of operating income reported for the same period last year. Net operating revenues for the three months ended September 30, 2005, were $36.2 million compared to $35.0 million for the same period last year. The $1.2 million increase in net operating revenues was primarily due to increased energy marketing revenues, partially offset by decreases in distribution and pipeline revenues.
Total operating expenses for the quarter were $43.6 million, $12.3 million higher than the $31.3 million reported during the same period last year. The increase in expenses primarily resulted from a $12.7 million charge related to the conversion of pension benefits for 182 represented employees from a defined benefit plan to a defined contribution plan. Excluding the $12.7 million pension charge, the $0.4 million decrease in operating costs was due to a $1.4 million decrease in selling, general, and administrative expense (SG&A), resulting from a reduction in bad debt expense, and a $0.5 million decrease in depreciation, depletion, and amortization expense (DD&A), partially offset by a $1.5 million increase in operations and maintenance expense (O&M).
Equitable Supply
Equitable Supply had operating income for the quarter of $79.9 million, 36% higher than the $58.9 million earned in the same period last year. Total operating revenues were $127.3 million, $28.6 million higher than the previous year's total operating revenue of $98.7 million. The increase in total operating revenues was due primarily to a 23% increase in the average well- head sales price and a 10% increase in total sales volumes, which was mainly attributable to the purchase of Eastern Seven Partners (ESP) earlier this year. Total operating revenues were also positively impacted by a 33% increase in gathering revenues, which was due to a 40% increase in the average gathering rates, partially offset by a 5% decline in gathered volumes.
Operating expenses for the quarter were $47.4 million compared to $39.7 million last year. $4.0 million of the increase in operating expenses resulted from the costs of operating properties purchased from ESP. The remaining $3.7 million increase in operating expenses was primarily due to increases of $2.3 million in production taxes, $1.1 million in DD&A, and $0.6 million in SG&A.
NORESCO
NORESCO's operating income for the third quarter 2005 was $3.3 million, $0.2 million less than the $3.5 million in the same period last year. Net operating revenues increased to $9.3 million from $9.0 million in 2004, while operating expenses increased to $6.0 million from $5.5 million in the third quarter 2004. Additionally, NORESCO recognized $1.5 million in equity earnings from its Panamanian power plant investment. NORESCO's quarter-end backlog was $39 million, compared to $93 million a year earlier.
Other Business
Kerr-McGee Corp.
In the third quarter 2005, Equitable sold approximately 0.4 million KMG shares for proceeds of $40.6 million, and a gain of $19.4 million.
In October, the Company sold its remaining approximately 0.7 million shares for proceeds of $65.6 million. A gain of $30.0 million will be recorded in the fourth quarter.
Executive Performance Incentive Programs
The Company's executive performance incentive programs are designed to align management's long-term incentive compensation to the absolute and relative returns earned by the Company's shareholders. The significant stock appreciation during the second and third quarters contributed to an expense of $15.3 million in the quarter and $29.9 million year-to-date.
2005 Earnings Guidance
The Company is reiterating its 2005 earnings guidance adjusted to reflect the impact of the third and fourth quarter sales of Kerr-McGee shares and the third quarter pension-related expense. The Company expects to earn between $2.15 and $2.18 per share.
Hedging
During the third quarter, the Company increased its hedge position for 2005 through 2012. The new hedges are collars, which protect revenues from decreases in natural gas prices below a floor in exchange for upside exposure limited by the cap price. In addition to the new hedges, the Company has pre- existing swap contracts that set a specific sales price for the hedged natural gas. The approximate volumes and prices of Equitable's hedges for the last quarter of 2005 through 2007 are:
Swaps 2005** 2006 2007
Total Volume (Bcf) 15 59 56
Average Price per Mcf (NYMEX)* $4.89 $4.77 $4.74
Collars 2005** 2006 2007
Total Volume (Bcf) 2 7 7
Average Floor Price per Mcf (NYMEX)* $7.35 $7.35 $7.35
Average Cap Price per Mcf (NYMEX)* $10.84 $10.84 $10.84
* The above price is based on a conversion rate of 1.05 MMbtu/Mcf
** October through December
Financing Activities
On August 11, 2005, the Company entered into a $650 million, 5-year revolving credit agreement, which is used to support the Company's commercial paper program. This agreement replaces the Company's previous $500 million, 3-year revolving credit agreement. The new facility has an expiration date of August 9, 2006, but the expiration date will automatically be extended to August 10, 2010, upon approval by the Pennsylvania Public Utility Commission (PUC). The facility's size may be increased on a one-time basis up to $1 billion.
On September 30, 2005, the Company issued $150 million of notes with a coupon rate of 5% and a maturity date of October 1, 2015, subject to PUC approval, which is required for long term debt issuances.
Stock Buyback
During the quarter, Equitable Resources repurchased nearly 0.9 million shares of Equitable stock. The total number of shares repurchased since October 1998 is approximately 41 million out of the current 50 million share repurchase authorization.
Operating Income and Earnings from Nonconsolidated Investments
The Company reports operating income and earnings (losses) 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 Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Operating income (thousands):
Equitable Utilities $(7,477) $3,680 $60,582 $70,680
Equitable Supply 79,901 58,904 208,424 173,160
NORESCO 3,285 3,475 9,881 10,728
Unallocated expenses (17,735) (1,532) (33,662) (23,357)
Operating Income $57,974 $64,527 $245,225 $231,211
The following table reconciles earnings (losses) from nonconsolidated
investments by segment as reported in this press release to the consolidated
earnings (losses) from nonconsolidated investments reported in the Company's
financial statements:
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Earnings (losses) from
nonconsolidated investments
(thousands):
Equitable Supply $131 $185 $261 $465
NORESCO 1,509 10 9,383 (39,105)
Unallocated 85 37 152 116
Total $1,725 $232 $9,796 $(38,524)
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, 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.
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, and earnings. 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, the following:
- the impact of adverse weather conditions on commodity prices, Equitable
Utilities' operations, and Equitable Supply's well drilling program
- the volatility of the price of natural gas and the effect of changing
prices on the Company's revenues, hedging, well drilling activities,
production taxes, and collections
- the need for, and availability and cost of, financing, including
changes to the Company's debt ratings by S&P and Moody's
- the implementation and execution of operational enhancements and cost
control initiatives
- the effect of curtailments or other disruptions in production and
gathering
- the substance, timing and availability of regulatory and legislative
actions, initiatives and proceedings
- the Company's success in implementing acquisition or divestiture
activities
- the ability of the Company to develop, produce, gather, and market
reserves, including its ability to substantially increase well drilling
activity
- the inherent uncertainty of estimating gas reserves and projecting
future rates of production and reserve development
- the ability of the Company to acquire and apply technology to its
operations
- the impact of competitive factors, including consolidation in the
utility industry
- the ability of the Company to maintain good working relations with its
represented employees and to retain its key personnel
- changes in the market price of the common stock of EQT and its peer
group
- general economic and political conditions
- changes in accounting rules or their interpretation, and
- other factors discussed in other reports filed by the Company from time
to time.
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 Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Operating revenues $301,512 $205,847 $1,010,310 $846,914
Cost of sales 128,798 63,238 451,454 354,416
Net operating revenues 172,714 142,609 558,856 492,498
Operating expenses:
Operation and maintenance 22,891 20,985 71,599 59,954
Production 15,327 11,111 44,523 32,587
Selling, general and
administrative 53,017 24,177 119,354 103,560
Impairment charges - - 7,835 -
Depreciation, depletion and
amortization 23,505 21,809 70,320 65,186
Total operating expenses 114,740 78,082 313,631 261,287
Operating income 57,974 64,527 245,225 231,211
Gain on exchange of Westport for
Kerr-McGee shares - - - 217,212
Charitable foundation contribution - - - (18,226)
Gain on sale and tender of
available-for-sale securities,
net 19,438 - 80,257 3,024
Equity in (losses) earnings of
nonconsolidated investments:
International investments 1,505 (3) 9,352 (39,137)
Other 220 235 444 613
1,725 232 9,796 (38,524)
Other income, net - 1,602 1,195 2,178
Minority interest 94 (105) (652) (834)
Interest expense 12,169 12,191 37,602 35,953
Income before income taxes 67,062 54,065 298,219 360,088
Income taxes 20,571 18,382 111,003 123,508
Net income $46,491 $35,683 $187,216 $236,580
Earnings per share of common stock:
Basic:
Weighted average common shares
outstanding 121,181 122,838 121,359 123,816
Net income $0.38 $0.29 $1.54 $1.91
Diluted:
Weighted average common shares
outstanding 123,576 125,660 124,016 126,556
Net income $0.38 $0.28 $1.51 $1.87
(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.
EQUITABLE UTILITIES
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
OPERATIONAL DATA
Heating degree days (30-year
average: Qtr-124; YTD-3,759) 34 88 3,465 3,533
Residential sales and
transportation volume (MMcf) 1,292 1,496 16,838 18,292
Commercial and industrial volume
(MMcf) 3,153 4,375 18,258 22,130
Total throughput (MMcf) -
Distribution 4,445 5,871 35,096 40,422
Total throughput (Bbtu) - Pipeline 13,055 15,750 45,961 54,384
Net operating revenues (thousands):
Distribution
Residential $11,856 $12,459 $72,771 $75,829
Commercial & industrial 4,903 5,730 33,553 35,946
Other 1,519 1,272 6,036 4,557
Pipeline 10,311 11,112 37,275 38,239
Marketing 7,575 4,424 27,867 19,003
$36,164 $34,997 $177,502 $173,574
Operating expenses as a % of net
operating revenues 120.68% 89.48% 65.87% 59.28%
Operating income (thousands):
Distribution $(16,362) $(3,777) $22,898 $37,316
Pipeline 1,811 3,502 11,065 15,817
Marketing 7,074 3,955 26,619 17,547
Total $(7,477) $3,680 $60,582 $70,680
Capital expenditures (thousands) $18,710 $13,857 $40,283 $43,427
FINANCIAL DATA (Thousands)
Utility revenues $78,883 $37,632 369,097 $302,265
Marketing revenues 88,667 56,665 235,425 211,983
Total operating revenues 167,550 94,297 604,522 514,248
Utility purchased gas costs 50,294 7,059 219,462 147,694
Marketing purchased gas costs 81,092 52,241 207,558 192,980
Net operating revenues 36,164 34,997 177,502 173,574
Operating expenses:
Operating and maintenance 14,465 12,959 42,982 37,365
Selling, general and
administrative 22,174 10,841 49,723 43,262
Impairment charges - - 3,841 -
Depreciation, depletion and
amortization 7,002 7,517 20,374 22,267
Total operating expenses 43,641 31,317 116,920 102,894
Operating income $(7,477) $3,680 $60,582 $70,680
EQUITABLE SUPPLY
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
OPERATIONAL DATA
Capital expenditures (thousands) $53,535 $40,003 $201,348 $90,385
Production:
Total sales volumes (MMcfe) 18,670 17,002 55,492 50,842
Average (well-head) sales price
($/Mcfe) $5.43 $4.43 $4.98 $4.40
Company usage, line loss (MMcfe) 1,334 1,378 3,681 3,613
Natural gas inventory usage, net
(MMcfe) - 80 (51) 9
Natural gas and oil production
(MMcfe) 20,004 18,460 59,122 54,464
Lease operating expense excluding
production tax ($/Mcfe) $0.29 $0.28 $0.31 $0.27
Production tax ($/Mcfe) $0.48 $0.32 $0.44 $0.32
Production depletion ($/Mcfe) $0.58 $0.53 $0.60 $0.54
Gathering:
Gathered volumes (MMcfe) 29,227 30,737 91,339 94,610
Average gathering fee ($/Mcfe) $0.81 $0.58 $0.77 $0.59
Gathering and compression expense
($/Mcfe) $0.29 $0.26 $0.31 $0.24
Gathering and compression
depreciation ($/Mcfe) $0.13 $0.11 $0.11 $0.11
(in thousands)
Production operating income $71,642 $54,939 $187,079 $157,870
Gathering operating income 8,259 3,965 21,345 15,290
Total $79,901 $58,904 $208,424 $173,160
Production depletion $11,526 $9,798 $35,425 $29,239
Gathering and compression
depreciation 3,760 3,450 10,485 10,057
Other depreciation, depletion and
amortization 779 643 2,731 2,427
Total depreciation, depletion and
amortization $16,065 $13,891 $48,641 $41,723
FINANCIAL DATA (Thousands)
Production revenues $103,450 $80,706 $282,266 $234,721
Gathering revenues 23,802 17,944 70,470 55,682
Total revenues 127,252 98,650 352,736 290,403
Operating expenses:
Lease operating expense excluding
production taxes 5,784 5,124 18,500 14,955
Production taxes 9,543 5,987 26,023 17,632
Gathering and compression 8,425 8,027 28,622 22,596
Selling, general and administrative 7,534 6,717 22,007 20,337
Impairment charges - - 519 -
Depreciation, depletion and
amortization 16,065 13,891 48,641 41,723
Total operating expenses 47,351 39,746 144,312 117,243
Operating income $79,901 $58,904 $208,424 $173,160
Other income $- $- $- $576
Equity earnings from
nonconsolidated investments $131 $185 $261 $465
NORESCO
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
OPERATIONAL DATA
Revenue backlog, end of period
(thousands) $39,060 $92,946 $39,060 $92,946
Gross profit margin 26.4% 24.0% 25.4% 26.7%
SG&A as a % of revenue 16.4% 14.0% 16.0% 15.9%
Capital expenditures (thousands) $143 $193 $434 $385
FINANCIAL DATA (Thousands)
Energy service contract revenues $35,156 $37,366 $112,484 $106,992
Energy service contract costs 25,858 28,404 83,866 78,471
Net operating revenues (gross
profit margin) 9,298 8,962 28,618 28,521
Operating expenses:
Selling, general and administrative 5,772 5,242 17,990 17,047
Depreciation and amortization 241 245 747 746
Total operating expenses 6,013 5,487 18,737 17,793
Operating income $3,285 $3,475 $9,881 $10,728
Earnings from nonconsolidated
investments:
International investments 1,505 (3) 9,352 (39,137)
Other 4 13 31 32
Minority interest 94 (105) (652) (834)
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Source: Equitable Resources, Inc. |
