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Higher Realized Prices, Increased Production Drive Energen’s Earnings Growth Company Narrows 2007 Guidance Range, Raises 2008 Guidance BIRMINGHAM, Alabama - Energen Corporation (NYSE: EGN) today attributed the 40 percent increase in its second quarter 2007 earnings per diluted share (EPS) primarily to higher realized sales prices for its natural gas, oil and natural gas liquids (NGL) production. Energen’s net income for the three months ended June 30, 2007, totaled $67.9 million, or 94 cents per diluted share, and compared favorably with net income of $49.6 million, or 67 cents per diluted share, in the same period a year ago. Energen also announced today that the diversified energy company is: - Increasing by 1 billion cubic feet equivalent (Bcfe) its 2007 production estimate to 96 Bcfe; - Increasing by 10 cents the lower end of its 2007 earnings guidance to reflect a new, tighter range of $3.90 - $4.20 per diluted share; - Increasing by 5 cents its 2008 earnings guidance to a new range of $3.65 - $4.05 per diluted share; - Increasing its acreage position in Alabama shales; the Company currently has 220,000 net acres under lease. MANAGEMENT COMMENTS “Energen has experienced a number of positive developments during the first half of 2007,” said James McManus, Energen’s president and chief executive officer. “Year-to-date earnings are very strong due to higher realized sales prices and increased production. Energen remains on track to realize its sixth consecutive year of record earnings. “We are very pleased with the success we continue to have in the San Juan Basin, where we are accelerating development largely through horizontal drilling in the Fruitland Coal formation. At mid-year, total production is outpacing our expectations, and we are pleased to be able to increase our 2007 production estimate to 96 Bcfe,” McManus said. “With almost 70 percent of our estimated production in 2007 already hedged at solid prices, our sensitivity to commodity price changes is quite low; this fact, together with increased production, has prompted us to narrow our earnings guidance range by raising the bottom of the range 10 cents to $3.90 per diluted share,” he added. “During the second quarter of 2007, Energen increased its hedge position for 2008 production,” said McManus. “We further added to this position just last week, such that 44 percent of our estimated 2008 production is now hedged: Approximately one-third of our estimated natural gas production is hedged and approximately two-thirds of both our estimated oil and NGL production. We believe there will be additional opportunities to add to our natural gas hedge position as we continue through the late summer and early winter. “Having hedged at attractive prices relative to our assumptions, we are raising our earnings guidance for 2008 by 5 cents to $3.65 - $4.05 per diluted share,” McManus said. “Our underlying price assumptions applicable to unhedged volumes remain unchanged at $8.50 per thousand cubic feet (Mcf) for natural gas, $65 per barrel for oil and 84.5 cents per gallon for NGLs,” he noted. “Although the 2008 strip price for natural gas currently is below our assumption, we were able to add to our hedge position just last week at prices above $8.50 per Mcf and believe the market will remain volatile, thereby providing future opportunities for additional hedging at or above our assumed price; meanwhile, the strip price for oil is well above our assumption at more than $70 per barrel." ALABAMA SHALES UPDATE Energen Resources Corporation, Energen’s oil and gas exploration and production subsidiary, and its AMI partner, Chesapeake Energy Corporation, have now amassed a 440,000-acre lease position in multiple shale plays in north-central Alabama; Energen Resources’ net position is 220,000 acres. The two companies plan to start a 5- to 10-well test program on their Alabama shale acreage in the 4th quarter of 2007. “This test program will run into 2008 and is aimed at defining the productive potential of our joint acreage position,” McManus said. Click here for the full Press Release posted on www.energen.com. |
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