PITTSBURGH, Oct. 29 /PRNewswire-FirstCall/ -- EQT Corporation (NYSE: EQT) today announced third quarter 2009 earnings per diluted share (EPS) of $0.02 on net income of $2.9 million and operating cash flow of $62.6 million. This compares with EPS of $0.73 on net income of $96.2 million and operating cash flow of $205.4 million in the third quarter 2008. Adjusting for long-term incentive compensation and office relocation expenses recorded in the third quarter 2009, EPS was $0.22.
Third quarter 2009 highlights include the following:
- EQT completed its most productive Marcellus well to date. Average daily production rate for the first 30 days was 9 MMcfe.
- Average costs for completed horizontal Marcellus wells have been reduced to $3 million. Unit finding and development (F&D) costs for EQT's Marcellus play have thus far been reduced to $0.86 per Mcfe.
- Sales of produced natural gas increased to 25.2 Bcfe; 18.5% higher than third quarter 2008.
- Unit lease operating expense excluding production taxes (LOE) decreased 11% for the quarter to $0.32 per Mcfe and has decreased 15% year-to-date to $0.28 per Mcfe; an industry leading result.
- Due to improved well results throughout all of our Appalachian shale plays, EQT expects sales of produced natural gas in 2009 to be 100 Bcfe; at the high end of our previous guidance of 98-100 Bcfe and 19% higher than 2008 sales of 84 Bcfe. These results further confirm EQT's position as the largest natural gas producer in the Appalachian Basin.
Operating income was $39.9 million, 75% lower than the third quarter 2008. Higher long-term incentive compensation expense and lower commodity prices more than offset higher revenues from increased production, gathering and processing volumes and higher utility rates. Lower commodity prices reduced operating income by $47.1 million in the third quarter. In total, net operating revenues declined by $10.9 million to $204.8 million. Operating expenses, excluding purchased gas cost and long-term incentive compensation and office relocation expenses, increased by $5.8 million.
Quarterly Results by Business
EQT Production
EQT Production's operating income for the quarter totaled $31.5 million, $35.8 million lower than the same period last year. Production operating revenues were $91.9 million; $30.2 million lower than in 2008. Sales of produced natural gas increased by 18.5%, to 25.2 Bcfe; driven by horizontal air drilling in the Huron/Berea play. Increased revenue and operating income from increased sales of produced natural gas was more than offset by lower wellhead natural gas prices. The average wellhead natural gas price was $3.55 per Mcfe; 37% lower than in 2008 due to lower NYMEX prices.
Despite the 18.5% increase in sales of produced natural gas, operating expenses for the quarter were up only 10.2%, to $60.4 million. Importantly, LOE was essentially unchanged over the third quarter of last year. Depreciation, depletion and amortization expense (DD&A) was $9.8 million higher, mainly due to increases in produced volumes and the depletion rate. Selling, general and administrative (SG&A) expense was $10.5 million, $2.0 million higher than last year and exploration expense was $4.5 million in the quarter; about a million dollars higher than last year. Partially offsetting these cost increases was a $7.5 million decrease in commodity-based production taxes.
The combination of increased produced volumes and flat lease operating expenses resulted in an 11% period-to-period decrease in LOE to $0.32 per Mcfe; an industry leading result. LOE plus production taxes yielded a unit rate of $0.58 per Mcfe for the quarter; 41% lower than last year.
Huron/Berea Play
Huron/Berea horizontal air drilling continued to be the main driver of sales of produced natural gas growth in the quarter. In the third quarter, approximately 26% of EQT's sales of produced natural gas came from horizontal Huron and Berea wells, a 129% increase over third quarter 2008. The company drilled 238 horizontal wells into the Huron and Berea during the first nine months and is on track to drill 348 horizontal wells in this play during 2009. EQT has drilled 712 horizontal wells in this play since inception.
Approximately 90% of the horizontal Huron wells are single-leg horizontal wells with an average length of 3,700 feet. Approximately 10% of the horizontal Huron wells are drilled using new geometries or techniques intended to increase production per well by increasing horizontal feet per well. Year-to-date EQT has drilled 15 multi-lateral wells with a total lateral length of between 13,000 and 24,000 feet per well; and two extended lateral wells with a lateral length of 5,600 feet per well; 66% increase in pay than a typical horizontal Huron/Berea well. Early results are encouraging and the company expects to continue to experiment with both revised geometry multi-lateral and extended single-lateral wells, with an expectation that this will further increase estimated ultimate recoveries (EURs) and decrease unit F&D costs going forward.
Marcellus Play
EQT drilled 16 horizontal Marcellus wells and turned-in-line (TIL) four wells in the third quarter 2009. One well in Greene County, Pennsylvania produced at an average rate of 9.0 MMcfe per day for the first 30 days of production. The other three wells are in Doddridge County, West Virginia. Two have been on-line for 30 days and averaged 1.5 MMcfe and 2.2 MMcfe per day for the first 30 days of production, respectively. EQT has now drilled 34 horizontal wells in the Marcellus play since 2008. Eleven of these wells have been on-line for more than 30 days. The company is on track to drill 41 horizontal Marcellus wells in 2009. Including vertical wells, EQT has drilled a total of 54 wells in this play since 2008.
Average 30-day initial production rates for horizontal Marcellus wells have ranged from 1.0 to 9.0 MMcfe per day. EQT currently estimates ultimate recovery of 3.5 Bcfe from these wells.
Costs to drill and complete horizontal Marcellus wells continue to decrease. The most recent wells have cost $3.0 million; a decrease of 45% during 2009. With these improved costs, unit F&D costs for this play have thus far been reduced to $0.86 per Mcfe.
Total sales of produced natural gas from the Marcellus play is currently 17 MMcfe per day. EQT expects this rate to more than double by year-end.
EQT Midstream
EQT Midstream earned $37.9 million of operating income for the quarter, compared to $29.8 million reported for the same period last year. Net operating revenues for the quarter were $87.5 million, 23% higher than last year. Net gathering revenues increased $5.9 million, 16% higher; driven by an 8% increase in gathering volumes and higher gathering rates. Net processing revenues increased $3.5 million, 30% higher; NGL's sold increased by 50% while the average NGL sales price decreased by 48%. Net transmission revenues increased by $5.1 million, 39% higher; driven by increased firm transportation revenues from our Big Sandy pipeline. Net storage, marketing and other revenues increased by $1.8 million, 19% higher; due to increased sales to an industrial customer.
Operating expenses increased year-over-year to $49.7 million, up from $41.5 million in the third quarter 2008. The increase was mainly attributable to a $5.4 million increase in operating and maintenance costs (O&M) and a $4.9 million increase in DD&A. The increases in O&M and DD&A were primarily due to the growth in the EQT Midstream business, including increased electric costs, property taxes and labor to operate the expanded gathering, processing and transmission infrastructure.
Equitrans
EQT Midstream successfully completed an open season earlier this month for a proposed expansion of its Equitrans pipeline that will provide high-pressure gathering/transmission capacity for Marcellus production in Southwestern Pennsylvania and Northern West Virginia. Total capacity demand indicated in the open season was 1,100,000 Dth per day. The next steps are to continue the process of securing firm precedent agreements with shippers and obtain FERC approval. The vast majority of the capital investment for the Equitrans expansion project would be invested beginning in the second half of 2011, pending FERC approval.
Distribution
Distribution's operating income totaled $3.2 million for the third quarter of 2009, compared to a $1.8 million operating loss for the third quarter of 2008. Net operating revenues were $25.3 million for the third quarter of 2009, compared to $22.4 million for the third quarter of 2008. The $2.9 million increase in net operating revenues was primarily a result of higher rates approved by the Pennsylvania Public Utility Commission in February 2009. Operating expenses totaled $22.1 million for the third quarter of 2009, compared to $24.2 million for the third quarter of 2008.
Other Business
Long-term Incentive Compensation Programs
The company has executive long-term incentive compensation programs designed to align management's long-term incentive compensation with the absolute and relative returns earned by the company's shareholders. The expense of these programs is mainly driven by changes in EQT's stock price and EQT's performance relative to a previously disclosed peer group. The increase in stock price during the third quarter 2009 resulted in a total pre-tax long-term incentive compensation expense of $28.2 million, which reduced after tax net income by approximately $23 million. This resulted in a $113.5 million swing in reported long-term incentive compensation expenses versus the $85.3 million reversal of previously recorded expenses in the third quarter 2008, as a result of the decrease in stock price during that period.
Office Relocation
The company completed its relocation from Pittsburgh's North Shore to an office building located in downtown Pittsburgh, to accommodate its growth. The company recognized an accounting charge of $4.1 million related to the move.
Hedging
EQT recognized a $45.4 million net gain from its production hedges in the quarter. The company's sales of produced natural gas are approximately 60% hedged for 2009. There were no changes to the company's production hedge position in the quarter. The company's total hedge positions for 2009 through 2011 production are:
2009** 2010 2011
----- ---- ----
Swaps
Total Volume (Bcf) 9 23 19
Average Price per Mcf (NYMEX)* $5.91 $5.12 $5.10
Puts
Total Volume (Bcf) - 3 3
Average Floor Price per Mcf
(NYMEX)* $- $7.35 $7.35
Collars
Total Volume (Bcf) 6 17 14
Average Floor Price per Mcf
(NYMEX)* $7.34 $7.28 $7.11
Average Cap Price per Mcf (NYMEX)* $13.68 $14.05 $14.12
* The above price is based on a conversion rate of 1.05 MMBtu/Mcf
**October 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 Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Operating income
(thousands):
EQT Production $31,522 $67,296 $109,587 $201,805
EQT Midstream 37,878 29,772 119,660 114,254
Distribution 3,230 (1,772) 56,435 38,207
Unallocated (expenses) /
income (32,698) 67,430 (42,100) 29,016
------- ------ ------- ------
Operating income $39,932 $162,726 $243,582 $383,282
======= ======== ======== ========
Unallocated (expenses) / income are primarily the result of long-term incentive compensation and administrative costs. For each period presented, the difference between equity in earnings of nonconsolidated investments as reported on the company's statements of consolidated income and on EQT Midstream's operational and financial report is the earnings from the company's ownership interest in Appalachian Natural Gas Trust.
Price Reconciliation
EQT Production's average wellhead sales price is calculated by allocating some revenues to EQT Midstream for the gathering, processing and transportation of the produced gas. EQT Production's average wellhead sales price for the three and nine months ended September 30, 2009 and 2008 were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Average NYMEX price ($/ MMBtu) $3.39 $10.24 $3.93 $9.73
Average Btu premium 0.37 1.19 0.37 1.13
---- ---- ---- ----
Average NYMEX price ($/ Mcfe) 3.76 11.43 4.30 10.86
Average basis 0.06 0.15 0.11 0.23
Hedge impact 1.81 (3.73) 1.38 (3.50)
---- ----- ---- -----
Average hedge adjusted price
($/ Mcfe) 5.63 7.85 5.79 7.59
Revenues to EQT Midstream
($/Mcfe) (1.68) (1.64) (1.69) (1.46)
Third-party gathering,
processing and transportation (0.40) (0.59) (0.34) (0.47)
----- ----- ----- -----
Total revenue deductions (2.08) (2.23) (2.03) (1.93)
----- ----- ----- -----
Average wellhead sales price
to EQT Production 3.55 5.62 3.76 5.66
EQT Revenue ($/ Mcfe)
Revenues to EQT Midstream 1.68 1.64 1.69 1.46
Revenues to EQT Production 3.55 5.62 3.76 5.66
---- ---- ---- ----
Average wellhead sales
price to EQT Corporation $5.23 $7.26 $5.45 $7.12
===== ===== ===== =====
Unit Costs
EQT's unit costs to produce, gather, process and transport EQT's produced natural gas were:
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Production segment costs:($/ Mcfe)
LOE $0.32 $0.36 $0.28 $0.33
Production taxes 0.26 0.62 0.30 0.57
SG&A 0.39 0.37 0.38 0.45
---- ---- ---- ----
0.97 1.35 0.96 1.35
Midstream segment costs: ($/ Mcfe)
Gathering, processing and
transmission 0.45 0.39 0.44 0.37
SG&A 0.14 0.11 0.14 0.12
---- ---- ---- ----
0.59 0.50 0.58 0.49
---- ---- ---- ----
Total $1.56 $1.85 $1.54 $1.84
===== ===== ===== =====
Non-GAAP Disclosures
Operating cash flow, net operating revenues, net income excluding long-term incentive compensation and office relocation expenses and operating expense excluding purchased gas cost and long-term incentive compensation and office relocation expenses, should not be considered in isolation or as substitutes for net income, net cash provided by operating activities, operating revenues or operating expenses prepared in accordance with GAAP. The tables below reconcile the non-GAAP disclosures to the most directly comparable GAAP numbers as derived from the financial statements to be included in the company's Form 10-Q for the three and nine months ended September 30, 2009 and 2008.
Operating Cash Flow
Operating cash flow is presented because of its acceptance as an indicator of an oil and gas exploration and production company's ability to internally fund exploration and development activities and to service or incur additional debt. The company has also included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the company may not control and may not relate to the period in which the operating activities occurred.
Three Months Ended Nine Months Ended
September 30, September 30,
--------- ---------
(thousands) 2009 2008 2009 2008
---- ---- ---- ----
Net Income: $2,909 $96,198 $101,547 $222,109
Add back (deduct):
Deferred income
taxes 11,921 70,166 94,799 195,381
Depreciation,
depletion, and
amortization 49,706 34,269 140,483 97,085
Other items, net (1,980) 4,789 (3,783) 1,357
------ ----- ------ -----
Operating cash
flow: $62,556 $205,422 $333,046 $515,932
======= ======== ======== ========
Add back (deduct):
Changes in margin
deposits $6,323 $208,951 $7,442 $(24,742)
Other changes in
operating assets
and liabilities 15,590 (176,246) 212,097 (164,319)
------ -------- -------- --------
Net cash provided
by operating
activities $84,469 $238,127 $552,585 $326,871
======= ======== ======== ========
Net Operating Revenues
Net operating revenues is presented because it is an important analytical measure used by management to evaluate period-to-period comparisons of revenue. Purchased gas cost, which is subject to commodity price volatility and a significant portion of which is passed on to customers with no net revenue impact, is typically excluded by management in such analyses.
Three Months Ended Nine Months Ended
September 30, September 30,
--------- ---------
(thousands) 2009 2008 2009 2008
---- ---- ---- ----
Net operating
revenues 204,784 215,713 668,629 695,966
Plus: Purchased
gas cost 13,573 82,114 257,171 471,644
------ ------ ------- -------
Operating
revenues $218,357 $297,827 $925,800 $1,167,670
Net Income Excluding Long-Term Incentive Compensation and Office Relocation Expenses
The third quarter results of 2009 and 2008 were impacted by long-term incentive compensation and office relocation expenses in the third quarter of 2009 and income from long-term incentive compensation expense reversals in the third quarter of 2008. Net income excluding long-term incentive compensation and office relocation expenses is presented because it is an important measure used by management to evaluate period-to-period comparisons of earnings trends.
Three Months Ended
September 30,
-----------------
(thousands) 2009 2008
---- ----
Income before income taxes
as reported: $10,000 $151,882
Add back: Long-term
incentive compensation
expenses 28,202 (85,311)
Add back: Office relocation
expenses 4,109 -
----- --
Adjusted income before taxes $42,311 $66,571
Taxes as adjusted $13,858 $24,831
Net income excluding
long-term incentive
compensation and office
relocation expenses: $28,453 $41,740
Diluted weighted average
common shares outstanding: 131,505 131,558
------- -------
Diluted EPS as adjusted: $0.22 $0.32
Operating Expenses Excluding Purchased Gas Cost and Long-Term Incentive Compensation and Office Relocation Expenses
Operating expenses excluding purchased gas cost and long-term incentive compensation and office relocation expenses is presented for comparability between periods and is a significant measure used by management in evaluating period-to-period cost trends.
Three Months Ended
September 30,
---------
(thousands) 2009 2008
---- ----
Operating expenses excluding
purchased gas cost and
long-term incentive
compensation and office
relocation expenses $132,541 $138,298
Plus: Purchased gas cost 13,573 82,114
Plus: Long-term incentive
compensation expenses 28,202 (85,311)
Plus: Office relocation
expenses 4,109 -
----- -----
Operating expenses $178,425 $135,101
EQT's conference call with securities analysts, which begins at 10:30 a.m. Eastern Time today, will be broadcast live via EQT's web site, http://www.eqt.com and on the Investor information page from the company's web site which is available at http://ir.eqt.com , and will be available for seven days.
EQT is an integrated energy company with emphasis on Appalachian area natural gas production, gathering, processing, transmission and distribution. Additional information about the company can be obtained through the company's web site, http://www.eqt.com. Investor information is available on EQT's web site at http://ir.eqt.com. EQT uses its web site as a channel of distribution of important information about the company, and routinely posts financial and other important information regarding the company and its financial condition and operations on the Investors Web pages.
EQT management speaks to investors from time to time. Slides for these discussions will be available online via EQT's web site. The slides may be updated periodically.
Cautionary Statements
The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The company uses the terms "probable", "possible", "potential" and other descriptions of volumes of reserves that may be recoverable through additional drilling or recovery techniques that the SEC's guidelines would prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and, accordingly, are subject to substantially greater risk of being actually realized. Investors are urged to consider closely the disclosure in the company's 2008 Form 10-K, File No. 001-03551 available from the company at 625 Liberty Avenue, Suite 1700, Pittsburgh, PA 15222, Attention: Corporate Secretary. You can also obtain the company's Form 10-K from the SEC by calling 1-800-SEC-0330.
Total sales volumes per day at period end is an operational estimate of the daily sales volume on a typical day (excluding curtailments) at the end of the applicable period.
F&D costs for the Marcellus Play is estimated by dividing the cost per well of $3.0 million by the expected EUR of 3.5 Bcfe.
The company is unable to provide a reconciliation of its projected operating cash flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with generally accepted accounting principles, because of uncertainties associated with projecting future net income and changes in assets and liabilities.
Disclosures in this press release contain certain 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 and infrastructure programs (including the Equitrans expansion project) and technology, production and sales volumes, reserves, EUR, F&D costs, the expected decline curve, capital expenditures, financing requirements, projected operating cash flows, hedging strategy and tax position. These statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The company has based these forward-looking statements on current expectations and assumptions about future events. While the company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the company's control. 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, 2008, as updated by any subsequent Form 10-Qs.
Any forward-looking statement applies 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.
EQT CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
(Thousands except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Operating revenues $218,357 $297,827 $925,800 $1,167,610
Operating expenses:
Purchased gas costs 13,573 82,114 257,171 471,644
Operation and maintenance 34,561 30,333 101,042 84,537
Production 16,153 23,076 46,033 59,965
Exploration 4,526 3,508 12,252 4,901
Selling, general and
administrative 59,906 (38,199) 125,237 66,196
Depreciation, depletion
and amortization 49,706 34,269 140,483 97,085
------ ------ ------- ------
Total operating expenses 178,425 135,101 682,218 784,328
------- ------- ------- -------
Operating income 39,932 162,726 243,582 383,282
Other income 511 611 1,799 5,709
Equity in earnings of
nonconsolidated
investments 1,950 1,557 4,682 4,548
Interest expense 32,393 13,012 78,096 40,992
------ ------ ------ ------
Income before income taxes 10,000 151,882 171,967 352,547
Income taxes 7,091 55,684 70,420 130,438
----- ------ ------ -------
Net income $2,909 $96,198 $101,547 $222,109
====== ======= ======== ========
Earnings per share of common stock:
Basic:
Weighted average common
shares outstanding 130,850 130,540 130,806 126,223
------- ------- ------- -------
Net income $0.02 $0.74 $0.78 $1.76
===== ===== ===== =====
Diluted:
Weighted average common
shares outstanding 131,505 131,558 131,450 127,288
------- ------- ------- -------
Net income $0.02 $0.73 $0.77 $1.74
===== ===== ===== =====
(A) Due to the seasonal nature of the Company's natural gas distribution
and storage businesses, and the volatility of commodity prices, the
interim statements for the three and nine months periods are not
indicative of results for a full year.
EQT PRODUCTION
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
OPERATIONAL DATA
Natural gas and oil production
(MMcfe) 26,722 23,249 76,705 65,813
Company usage,
line loss (MMcfe) (1,566) (2,012) (4,207) (4,905)
------ ------ ------ ------
Total sales volumes (MMcfe) 25,156 21,237 72,498 60,908
Average (well-head) sales price
($/Mcfe)* $3.55 $5.62 $3.76 $5.66
Sales of Produced Natural Gas
detail (MMcfe)
Horizontal Huron
/ Berea Play 6,661 2,914 17,793 6,043
Horizontal Marcellus Play 539 208 1,301 215
CBM Play 3,129 2,989 9,144 8,806
Other (vertical non-CBM) 14,827 15,126 44,260 45,844
------ ------ ------ ------
Total sales of produced
natural gas 25,156 21,237 72,498 60,908
Lease operating expenses,
excluding
production taxes ($/Mcfe) $0.32 $0.36 $0.28 $0.33
Production taxes ($/Mcfe) $0.26 $0.62 $0.30 $0.57
Production depletion ($/Mcfe) $1.04 $0.81 $1.03 $0.81
Production depletion $27,734 $18,796 $79,165 $53,389
Other depreciation,
depletion and amortization 2,122 1,219 4,559 3,368
----- ----- ----- -----
Total depreciation,
depletion and amortization $29,856 $20,015 $83,724 $56,757
Capital expenditures
(thousands) $144,497 $250,058 $446,813 $492,934
FINANCIAL DATA (Thousands)
Total operating revenues $91,922 $122,083 $279,570 $352,109
Operating expenses:
Lease operating expense
excluding production taxes 8,633 8,379 21,845 21,395
Production taxes 6,932 14,387 23,082 37,724
Exploration expense 4,527 3,508 12,252 4,901
Selling, general and
administrative 10,452 8,498 29,080 29,527
Depreciation, depletion and
amortization 29,856 20,015 83,724 56,757
------ ------ ------ ------
Total operating expenses 60,400 54,787 169,983 150,304
Operating income $31,522 $67,296 $109,587 $201,805
* Average well-head sales price is calculated as market price adjusted
for hedging activities less deductions for gathering, processing and
transmission included in EQT Midstream revenues. These deductions
totaled $1.68 and $1.64/Mcfe for the three months ended September 30,
2009 and 2008, respectively and $1.69/Mcfe and $1.47/Mcfe for the nine
months ended September 30, 2009 and 2008, respectively.
EQT MIDSTREAM
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
OPERATIONAL DATA
Gathered volumes (BBtu) 40,849 37,851 118,918 105,132
Average gathering fee ($/MMBtu) $1.05 $0.99 $1.04 $0.99
Gathering and compression
expense ($/MMBtu) $0.42 $0.38 $0.41 $0.37
NGLs Sold (Mgal) (a) 29,948 19,916 89,836 55,490
Average NGL sales price ($/gal) $0.78 $1.51 $0.69 $1.48
Transmission pipeline
throughput (BBtu) 21,471 22,605 61,003 53,745
Net operating revenues
(thousands):
Gathering $42,725 $36,779 $122,178 103,507
Processing 15,076 11,624 31,823 32,077
Transmission 18,006 12,950 55,551 34,904
Storage, marketing and other 11,737 9,889 51,758 54,773
------ ----- ------ ------
Total net operating revenues $87,544 $71,242 $261,310 $225,261
Capital expenditures
(thousands) $39,817 $184,854 $155,334 $432,518
FINANCIAL DATA (Thousands)
Total operating revenues $124,065 $186,114 $366,939 $561,216
Purchased gas costs 36,521 114,872 105,629 335,955
------ ------- ------- -------
Total net operating revenues 87,544 71,242 261,310 225,261
Operating expenses:
Operating and maintenance 24,957 19,607 70,597 52,550
Selling, general and
administrative 11,232 13,256 32,551 34,789
Depreciation and amortization 13,477 8,607 38,502 23,668
------ ----- ------ ------
Total operating expenses 49,666 41,470 141,650 111,007
------ ------ ------- -------
Operating income $37,878 $29,772 $119,660 $114,254
Other income $342 $460 $1,247 $5,307
Equity in earnings of
nonconsolidated investments $1,946 $1,363 $4,608 $3,989
(a) NGLs sold includes NGLs recovered at the Company's processing plant
and transported to a fractionation plant owned by a third party for
separation into commercial components, net of volumes retained, as
well as equivalent volumes sold at liquid component prices under the
Company's contractual processing arrangements with third parties.
DISTRIBUTION
OPERATIONAL AND FINANCIAL REPORT
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
OPERATIONAL DATA
Heating degree days (30 year
average: Qtr - 124; YTD - 3,759) 81 41 3,521 3,502
Residential sales and transportation
volume (MMcf) 1,282 1,278 15,915 15,988
Commercial and industrial volume
(MMcf) 5,178 3,992 21,813 20,827
----- ----- ------ ------
Total throughput (MMcf) -
Distribution 6,460 5,270 37,728 36,815
Net operating revenues (thousands):
Residential $14,044 $12,090 $77,039 $71,716
Commercial & industrial 6,353 5,884 34,170 33,218
Off-system and energy services 4,921 4,414 16,854 13,662
----- ----- ------ ------
Total net operating revenues $25,318 $22,388 $128,063 $118,596
Capital expenditures (thousands) $9,844 $12,179 $25,337 $32,162
FINANCIAL DATA (Thousands)
Total operating revenues $54,599 $88,789 $425,865 $459,482
Purchased gas costs 29,281 66,401 297,802 340,886
------ ------ ------- -------
Net operating revenues 25,318 22,388 128,063 118,596
Operating expenses:
Operating and maintenance $10,158 $11,075 $30,588 $32,393
Selling, general and
administrative 6,405 7,878 24,591 32,581
Depreciation and amortization 5,525 5,207 16,449 15,415
----- ----- ------ ------
Total operating expenses 22,088 24,160 71,628 80,389
------ ------ ------ ------
Operating income (loss) $3,230 $(1,772) $56,435 $38,207
