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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER 1-3551
EQUITABLE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-0464690
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
420 Boulevard of the Allies 15219
Pittsburgh, Pennsylvania (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (412) 261-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, no par value New York Stock Exchange
Philadelphia Stock Exchange
7 1/2% Debentures due July 1, 1999 New York Stock Exchange
9 1/2% Convertible Subordinated
Debentures due 2006 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter periods that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of
the registrant as of February 28, 1994: $1,245,649,859
The number of shares outstanding of the issuer's classes of common
stock as of February 28, 1994: 34,481,657
DOCUMENTS INCORPORATED BY REFERENCE
Part III, a portion of Item 10 and Items 11, 12, and 13 are
incorporated by reference to the Proxy Statement for the Annual
Meeting of Stockholders on May 27, 1994, to be filed with the
Commission within 120 days after the close of the Company's fiscal
year ended December 31, 1993.
Index to Exhibits - Page 62.
TABLE OF CONTENTS
Part I Page
Item 1 Business 1
Item 2 Properties 9
Item 3 Legal Proceedings 11
Item 4 Submission of Matters to a Vote
of Security Holders 11
Item 10 Directors and Executive Officers of the
Registrant 12
Part II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters 14
Item 6 Selected Financial Data 15
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Item 8 Financial Statements and Supplementary Data 22
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 48
Part III
Item 10 Directors and Executive Officers of
the Registrant 49
Item 11 Executive Compensation 49
Item 12 Security Ownership of Certain Beneficial Owners
and Management 49
Item 13 Certain Relationships and Related Transactions 49
Part IV
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K 50
Index to Financial Statements
and Financial Statement Schedules
Covered by Report of
Independent Auditors 51
Index to Exhibits 62
Signatures 66
PART I
Item 1. Business
(a)Equitable Resources, Inc. ("Equitable" or the "Company")
was formed under the laws of Pennsylvania by the consolidation
and merger in 1925 of two constituent companies, the older of
which was organized in 1888. The Company owns all the capital
stock of subsidiary companies. Principal subsidiaries are
Equitable Resources Energy Company ("Equitable Resources Energy")
and Kentucky West Virginia Gas Company ("Kentucky West").
Equitable Resources Energy owns all the capital stock of
Equitable Resources Marketing Company ("ERMCO") and Andex Energy,
Inc. ("Andex"). Kentucky West owns all the capital stock of
Equitrans, Inc. ("Equitrans") and Nora Transmission, Inc.
("Nora"). ERMCO owns all the capital stock of Louisiana
Intrastate Gas Company ("LIG"). The Company and all such
subsidiaries are referred to as the "Company and its
Subsidiaries" or the "Companies." The Companies operate in the
Appalachian area and, to a lesser extent, in the Rocky Mountain,
Southwest, Louisiana and Gulf Coast offshore areas, the Canadian
Rockies and has interests in Colombia, South America. The
Companies engage primarily in the exploration for, development,
production, purchase, transmission, storage, distribution and
marketing of natural gas, the extraction of natural gas liquids,
the exploration for, development, production and sale of oil and
contract drilling.
LIG was acquired by the Company on June 30, 1993 as
described in Note L to the consolidated financial statements in
Part II. LIG owns a 1,900 mile intrastate pipeline system in
Louisiana, four natural gas processing plants and is also engaged
in gas marketing. Hershey Oil Corporation ("Hershey") was
acquired on July 8, 1993. Hershey owns natural gas and oil
reserves and acreage in Alberta, Canada. These subsidiaries are
included in the Energy Resource segment.
(b)The Company's business is comprised of two business
segments, Energy Resources and Utility Services. Financial
information by business segment is presented in Note K to the
consolidated financial statements contained in Part II.
(b) (1)Not applicable.
(b) (2)Not applicable.
(c) (1)ENERGY RESOURCES. Energy Resources activities are
conducted by Equitable Resources Energy Company through its
divisions and subsidiaries. Its activities are principally in
the Appalachian area where it explores for, develops, produces
and markets natural gas and oil, performs contract drilling and
well maintenance services, and extracts and markets natural gas
liquids.
Energy Resources also conducts operations in the Rocky
Mountain area including the Canadian Rockies where it explores
for, develops and produces oil, and to a lesser extent natural
gas.
In Louisiana, the segment provides intrastate transportation
of gas and extracts and markets natural gas liquids.
Item 1. Business (Continued)
In the Southwest and Gulf Coast offshore areas, this segment
participates in exploration and development of gas and oil
projects. Energy Resources also owns an interest in two natural
gas liquids plants in Texas.
Andex participates in ventures to explore for and develop
oil in Colombia, South America.
ERMCO operates nationwide as a full-service natural gas
marketing and supply company. ERMCO provides a full range of
energy services, including monthly "spot" and longer term
contracts, peak shaving and transportation arrangements.
UTILITY SERVICES. Utility Services activities are conducted
by Equitable Gas Company ("Equitable Gas"), a division of the
Company, and three wholly-owned subsidiaries: Kentucky West,
Equitrans and Nora.
Equitable Gas is a natural gas utility, regulated by state
public utility commissions in Pennsylvania, West Virginia and
Kentucky and is engaged in the purchase, distribution, marketing
and transportation of natural gas. The territory served by
Equitable Gas embraces principally the city of Pittsburgh and
surrounding municipalities in southwestern Pennsylvania, a few
municipalities in northern West Virginia and field line sales in
eastern Kentucky.
Kentucky West, regulated by the Federal Energy Regulatory
Commission (FERC), is an open access natural gas pipeline
company. Prior to restructuring pursuant to FERC Order 636,
Kentucky West purchased gas from the Energy Resource segment and
independent producers in Kentucky. Most of Kentucky West's sales
were to Equitrans and, to a lesser extent, to industrial
customers and other utilities. Kentucky West also transported
gas independently marketed by Energy Resources. With the FERC
Order 636 restructuring, which was effective July 1, 1993,
Kentucky West provides only open-access transportation service.
Transportation service is provided to Equitable Gas, Equitrans,
Energy Resources and other industrial end-users. Kentucky West's
pipelines are not physically connected with those of Equitrans or
Equitable Gas and deliveries are made to Columbia Gas
Transmission Corporation, a nonaffiliate, which in turn delivers
like quantities to Equitrans in West Virginia and Pennsylvania
under a Transportation and Exchange Agreement.
Equitrans is a FERC regulated open access pipeline company
with production, storage and transmission facilities in
Pennsylvania and West Virginia. Prior to FERC Order 636
restructuring, Equitrans produced, purchased and sold gas and
provided transportation and underground storage services. With
the FERC Order 636 restructuring, which was effective September
1, 1993, Equitrans provides transportation and storage services.
Equitrans provides transportation service for Equitable Gas
Company and nonaffiliates including customers in off-system
markets. Storage services are provided for Equitable Gas Company
and nine nonaffiliated customers.
Nora is a FERC regulated pipeline company which transports
Energy Resources' gas produced in Virginia and Kentucky.
Utility services, principally gas service, are provided to
more than 265,000 customers located mainly in the city of
Pittsburgh and its environs. Residential and commercial sales
volumes reflect annual variations which are primarily related to
weather. In addition, commercial and industrial sales volumes
have decreased mainly as the result of customers acquiring gas
directly from third parties. However, this gas is transported
and delivered by Utility Services.
Item 1. Business (Continued)
(c) (1) (i)Operating revenues as a percentage of total
operating revenues for each of the two business segments during
the years 1991 through 1993 are as follows:
1993 1992 1991
Energy Resources:
Natural gas - production 10% 10% 8%
- marketing 45 32 26
Natural gas liquids 4 3 3
Contract drilling 1 2 2
Oil 3 5 6
Intrastate transportation 1 - -
Other 1 1 1
Total Energy Resources 65 53 46
Utility Services:
Residential 23 30 34
Commercial 5 7 9
Industrial 1 2 2
Transportation 4 6 7
Marketed gas 1 - -
Utilities and Other 1 2 2
Total Utility Services 35 47 54
Total Revenues 100% 100% 100%
(c) (1) (ii)Not applicable.
(c) (1) (iii)The following pages (4, 5 and 6) summarize gas
and oil supply and disposition for the years 1991 through 1993.
Item 1. Business (Continued)
1993
Utility Energy
Services Resources Eliminations Consolidated
Gas Produced, Purchased
and Sold (MMcf):
Produced 1,972 53,550 55,522
Purchased:
Other producers 51,870 217,985 269,855
Inter-segment purchases 7,468 3,345 (10,813)
Total purchases 59,338 221,330 (10,813) 269,855
Total produced
and purchased 61,310 274,880 (10,813) 325,377
Deduct:
Net increase in
gas in storage 6,204 6,204
Extracted natural gas liquids
(equivalent gas volumes) 3,005 3,005
System use and
unaccounted for 8,259 294 8,553
Total 46,847 271,581 (10,813) 307,615
Gas Sales (MMcf):
Residential 29,980 29,980
Commercial 8,235 8,235
Industrial 3,590 (340) 3,250
Utilities 32 32
Production 53,550 (3,719) 49,831
Marketing 4,052 218,031 (5,796) 216,287
Total gas sales 45,889 271,581 (9,855) 307,615
Processed gas extracted 958 (958)
Total 46,847 271,581 (10,813) 307,615
Natural Gas Transported (MMcf) 66,272 50,659 (34,628) 82,303
Oil Produced and Sold
thousands of bls) 2,112 2,112
Natural Gas Liquids Sold
(thousands of gallons) 162,191 162,191
Average Selling Price
Gas - Utility Sales (per Mcf) $7.631
- Energy Resource Production $ 2.266
- Energy Resource Marketing $ 2.320
Oil (per barrel) $16.183
Natural Gas Liquids (per gallon) $ .291
Item 1. Business (Continued)
1992
Utility Energy
Services Resources Eliminations Consolidated
Gas Produced, Purchased
and Sold (MMcf):
Produced 2,698 48,243 50,941
Purchased:
Pipeline suppliers 5,008 5,008
Other producers 37,967 131,711 169,678
Sub-total 42,975 131,711 174,686
Inter-segment purchases 8,489 2,654 (11,143)
Total purchases 51,464 134,365 (11,143) 174,686
Total produced
and purchased 54,162 182,608 (11,143) 225,627
Deduct:
Net decrease in
gas in storage (3,704) (3,704)
Extracted natural gas liquids
(equivalent gas volumes) 2,061 2,061
System use and
unaccounted for 13,180 593 13,773
Total 44,686 179,954 (11,143) 213,497
Gas Sales (MMcf):
Residential 30,089 30,089
Commercial 8,097 8,097
Industrial 4,312 (593) 3,719
Utilities 127 127
Production 48,243 (4,491) 43,752
Marketing 131,711 (3,998) 127,713
Total gas sales 42,625 179,954 (9,082) 213,497
Processed gas extracted 2,061 (2,061)
Total 44,686 179,954 (11,143) 213,497
Natural Gas Transported (MMcf) 71,166 (35,453) 35,713
Oil Produced and Sold (thousands of bls) 2,406 2,406
Natural Gas Liquids Sold
(thousands of gallons) 64,938 64,938
Average Selling Price
Gas - Utility Sales (per Mcf) $ 7.431
- Energy Resource Production $ 1.925
- Energy Resource Marketing $ 2.044
Oil (per barrel) $18.066
Natural Gas Liquids (per gallon) $ .327
Item 1. Business (Continued)
1991
Utility Energy
Services Resources Eliminations Consolidated
Gas Produced, Purchased
and Sold (MMcf):
Produced 3,322 40,022 43,344
Purchased:
Pipeline suppliers 7,729 7,729
Other producers 34,243 102,456 136,699
Sub-total 41,972 102,456 144,428
Inter-segment purchases 13,038 2,642 (15,680)
Total purchases 55,010 105,098 (15,680) 144,428
Total produced
and purchased 58,332 145,120 (15,680) 187,772
Deduct:
Net increase in
gas in storage 3,634 3,634
Extracted natural gas liquids
(equivalent gas volumes) 2,039 2,039
System use and
unaccounted for 12,187 603 12,790
Total 42,511 142,478 (15,680) 169,309
Gas Sales (MMcf):
Residential 28,103 28,103
Commercial 7,720 7,720
Industrial 4,487 (603) 3,884
Utilities 162 162
Production 40,022 (8,060) 31,962
Marketing 102,456 (4,978) 97,478
Total gas sales 40,472 142,478 (13,641) 169,309
Processed gas extracted 2,039 (2,039)
Total 42,511 142,478 (15,680) 169,309
Natural Gas Transported (MMcf) 70,897 (29,204) 41,693
Oil Produced and Sold (thousands of bls) 2,006 2,006
Natural Gas Liquids Sold
(thousands of gallons) 64,200 64,200
Average Selling Price
Gas - Utility Sales (per Mcf) $7.498
- Energy Resource Production $ 1.811
- Energy Resource Marketing $ 1.814
Oil (per barrel) $18.980
Natural Gas Liquids (per gallon) $ .367
Item 1. Business (Continued)
During 1993, a total of 325,377,000 Mcf of gas was produced
and purchased by the Companies compared with 225,627,000 Mcf in
1992. The increase reflects greater marketing activity,
including the consolidation of LIG, and increased production.
GAS PURCHASES. Total purchases in 1993 amounted to
269,855,000 Mcf, of which 222,037,000 Mcf was applicable to
marketing operations and 47,818,000 Mcf was for system supply,
compared with 131,711,000 Mcf for marketing operations and
42,975,000 Mcf for system supply in 1992. Through gas purchase
contracts for system supply, the Company controls proved reserves
on acreage developed by independent producers. The majority of
these contracts cover the productive lives of the wells.
NATURAL GAS AND OIL PRODUCTION. Natural gas production by
Energy Resources in 1993 of 53,550,000 Mcf increased over the
1992 total of 48,243,000 Mcf. Utility Services production in
1993 of 1,972,000 Mcf decreased from the 1992 total of 2,698,000
Mcf.
Production of crude oil in 1993 was 2,112,000 barrels,
compared with 2,406,000 barrels in 1992.
In 1993, Energy Resources drilled 212 gross wells (152.7 net
wells). The primary focus of drilling activity was in Kentucky
and Virginia. Drilling in this area was for development of oil
in the Big Lime formation and coalbed methane.
The Company has been able to develop gas reserves at costs
which make it very competitive in marketing its gas to pipeline
and commercial buyers. As a result, even in periods of surplus
gas supply, the Company has been able to sell gas produced by
energy resource operations at a profit.
NATURAL GAS AND OIL RESERVES. The Company's estimate of
proved developed and undeveloped gas reserves for the Energy
Resource segment comprised 822.6 Bcf as of December 31, 1993.
These reserves included 759.3 Bcf of proved developed reserves.
The Company's oil reserves at December 31, 1993 consisted of 16.5
million barrels of proved developed and undeveloped reserves;
proved developed oil reserves amounted to 16.4 million barrels.
Substantially all of the gas and approximately one half of the
oil reserves are located in the Appalachian area. See Note P to
the Consolidated Financial Statements in Part II for details of
gas and oil producing activities.
STORAGE. Net storage withdrawals for system use during the
1992-93 heating season were 11.0 Bcf, compared with 9.8 Bcf the
previous heating season. Net withdrawals of 12.8 Bcf were made
during the 1992-93 heating season for storage service customers
compared with 13.4 Bcf the previous heating season.
SUPPLY OUTLOOK. The Company's near-term utility gas supply
is excellent. The long-range gas supply outlook also is very
favorable. Annual gas supply is forecasted to exceed demand at
least for the next decade.
Item 1. Business (Continued)
Energy Resources has also been in a favorable supply
position and reserves have continued to increase. However, the
development or purchase of future supplies will depend largely on
energy prices.
(c) (1) (iv) Equitable Gas is regulated by the Pennsylvania
Public Utility Commission and the Public Service Commissions of
West Virginia and Kentucky; LIG is regulated by the Louisiana
Public Service Commission; Kentucky West, Equitrans, Nora, LIG
and Equitable Resources Energy are regulated by the Federal
Energy Regulatory Commission under the Natural Gas Act and the
Natural Gas Policy Act. Equitable Gas, Kentucky West, Equitrans,
Nora, LIG and Equitable Resources Energy are also subject to
regulation by the Department of Transportation under the Natural
Gas Pipeline Safety Act of 1968 with respect to safety
requirements in the design, construction, operation and
maintenance of pipelines and related facilities.
(c) (1) (v) and (vi) Approximately 65 percent of annual
Utility Service revenue is recorded during the winter heating
season from November through March. Significant quantities of
purchased gas are placed in underground storage inventory during
the off-peak season to accommodate high customer demands during
the winter heating season. Funds required to finance this
inventory are obtained through short-term loans.
Energy Resource's revenues are not subject to seasonal
variation to the same degree as Utility Service revenues.
(c) (1) (vii)Not applicable.
(c) (1) (viii)Not applicable.
(c) (1) (ix)Not applicable.
(c) (1) (x)Equitable Gas is in competition with others for
the purchase of natural gas and Equitable Resources Energy is in
competition with others for the acquisition of gas and oil
leases.
Equitable Gas competes for gas sales with other utilities in
its service area, as well as with other fuels and forms of energy
and other sources of natural gas available to existing or
potential customers.
Utility Services has been successful in meeting competition
with aggressive marketing which retained load and added new
residential, commercial and off-system customers in areas served
by two or more energy suppliers. This has been achieved by
responding to market requirements with a portfolio of firm and
interruptible services at competitive prices.
See Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in Part
II regarding FERC Order 636 and its impact on the operations of
the Utility Service companies.
(c) (1) (xi) Not material.
Item 1. Business (Continued)
(c) (1) (xii)The Company and its subsidiaries are subject to
federal, state and local environmental laws and regulations.
Principal concerns are with respect to oil and thermal pollution
of waterways, storage and disposal of hazardous wastes and
liquids and erosion and sedimentation control in pipeline
construction work. For further discussion of environmental
matters, see Management's Discussion and Analysis of Financial
Condition and Results of Operations and Note N to the
consolidated financial statements in Part II.
(c) (1) (xiii)The Companies had 2,454 regular employees at
the end of 1993.
(d) Not material.
Item 2. Properties
Principal facilities are owned by the Company's business
segments with the exception of several office locations and
warehouse buildings. The terms of the leases on these facilities
expire at various times from 1994 through 2014. All leases
contain renewal options for various periods. A minor portion of
equipment is also leased. With few exceptions, utility
transmission, storage and distribution pipelines are located on
or under (1) public highways under franchises or permits from
various governmental authorities, or (2) private properties owned
in fee, or occupied under perpetual easements or other rights
acquired for the most part without examination of underlying land
titles. The Company's facilities have adequate capacity, are well
maintained and, where necessary, are replaced or expanded to meet
operating requirements.
UTILITY SERVICES. Equitable Gas owns and operates natural
gas distribution properties as well as other general property and
equipment in Pennsylvania, West Virginia and Kentucky. Equitrans
owns and operates production, underground storage and
transmission facilities as well as other general property and
equipment in Pennsylvania and West Virginia. Kentucky West owns
and operates gathering and transmission properties as well as
other general property and equipment in Kentucky.
ENERGY RESOURCES. This business segment owns or controls
and operates substantially all of the Company's gas and oil
production properties, the majority of which are located in the
Appalachian area. This segment also owns an intrastate pipeline
system and four hydrocarbon extraction plants in Louisiana,
hydrocarbon extraction facilities in Kentucky with a 100-mile
liquid products pipeline which extends into West Virginia and an
interest in two hydrocarbon extraction plants in Texas.
This business segment owns or controls acreage of proved
developed and undeveloped gas and oil lands located principally
in the Appalachian area and, to a lesser extent, in the Rocky
Mountain area including the Canadian Rockies, the Southwest and
Gulf Coast offshore areas and in Colombia, South America. The
acquisition of Canadian properties in 1993 is described in Note L
to the consolidated financial statements and significant
purchases of oil and gas properties in 1991 are described in Note
M to the consolidated financial statements contained in Part II.
Information relating to Company estimates of natural gas and oil
reserves and future net cash flows is summarized in Note P to the
consolidated financial statements in Part II.
No report has been filed with any Federal authority or
agency reflecting a five percent or more difference from the
Company's estimated total reserves.
Item 2. Properties (Continued)
Gas and Oil Production (Energy Resources):
1993 1992 1991
Gas - MMcf 53,550 48,243 40,022
Oil - Thousands of Barrels 2,112 2,406 2,006
Natural Gas:
Average field sales price of natural gas produced during
1993, 1992 and 1991 was $2.27, $1.93 and $1.81 per Mcf,
respectively.
Average production cost (lifting cost) of natural gas
during 1993, 1992 and 1991 was $.458, $.443 and $.460 per
Mcf, respectively.
Oil:
Average sales price of oil produced during 1993, 1992 and
1991 was $16.18, $18.07 and $18.98 per barrel,
respectively.
Average production cost (lifting cost) of oil during 1993,
1992 and 1991 was $4.30, $3.75 and $3.77 per barrel,
respectively.
Gas Oil
Total productive wells at December 31, 1993:
Total gross productive wells 5,838 876
Total net productive wells 4,301 535
Total acreage at December 31, 1993:
Total gross productive acres 725,000
Total net productive acres 596,000
Total gross undeveloped acres 3,192,000
Total net undeveloped acres 2,341,000
Number of net productive and dry exploratory wells and
number of net productive and dry development wells drilled:
1993 1992 1991
Exploratory wells:
Productive 12.0 11.6 12.4
Dry 6.7 6.3 8.6
Development wells:
Productive 123.4 134.1 120.4
Dry 10.6 12.0 12.6
As of December 31, 1993, the Company had 4 gross wells (2.16
net wells) in the process of being drilled.
Item 3. Legal Proceedings
LIG is a party to certain claims involving its gas purchase
contracts, including take-or-pay liabilities. As more fully
described in Note L to the consolidated financial statements in
Part II, the seller, and/or the previous owner of LIG, have
provided indemnifications for the Company.
There are no other material pending legal proceedings, other
than those which are adequately covered by insurance, to which
the Company or any of its subsidiaries is a party, or to which
any of their property is subject. The Company is claimant as a
creditor in Columbia Gas Transmission Company's bankruptcy
proceeding as described in Notes B and N to the consolidated
financial statements in Part II.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's
security holders during the last quarter of its fiscal year ended
December 31, 1993.
Item 10. Directors and Executive Officers of the Registrant
(b) Identification of executive officers
Name and Age Title Business Experience
First elected to
present position
Donald I. Moritz Chairman and Chief December 17, 1993;
(66) Executive Officer President and Chief
Executive Officer
from August 1, 1978.
First elected to
present position
December 17, 1993;
Executive Vice
President and Chief
Operating Officer
Frederick H. President and from June 1, 1992;
Abrew (56) Chief Operating
Officer Executive Vice
President from
June 1, 1991;
Executive Vice
President - Utility
Services from June 1,
1988.
First elected to
Senior Vice present position
Jeremiah J. Ayres President - February 1, 1991;
(61) Environment and Vice President -
Technology Corporate Services
from March 26, 1987.
Augustine A. Senior Vice First elected to
Mazzei, Jr. (57) President and present position
General Counsel June 1, 1988.
First elected to
Robert E. Daley Vice President and present position
(54) Treasurer May 22, 1986.
First elected to
present position
June 1, 1992;
President - Equitable
Harry E. Gardner, Vice President - Resources Energy
Jr. (56) Energy Resources Company since January
1, 1991; President
Equitable Resources
Exploration Division
from July 1, 1987.
Joseph L. Giebel Vice President - First elected to
(63) Accounting and present position
Administration February 1, 1991;
Vice President -
Accounting from May
1, 1981.
Name and Age Title Business Experience
First elected to
present position
January 1, 1994; Vice
President - Utility
Services from June 1,
John C. Gongas, Vice President - 1992; President of
Jr. (49) Utility Group Kentucky West
Virginia Gas Company
since April 20, 1992;
President of
Equitrans, Inc. from
February 26, 1988.
Vice President and First elected to
Audrey C. Moeller Corporate present position May
(58) Secretary 22, 1986.
First elected to
present position
January 1, 1994; Vice
President - Corporate
Development from
August 1, 1991;
Director - Special
Projects from October
Richard Riazzi Vice President - 1, 1990; President -
(39) Energy Group Equitable Resources
Marketing Company
from February 27,
1989; Vice President
- Strategic Planning
for Equitable
Resources Energy
Company from July 1,
1987.
Officers are elected annually to serve during the ensuing year
or until their successors are chosen and qualified. Except as
indicated, the officers listed above were elected on May 21,
1993.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
(a) The Company's common stock is listed on the New York
Stock Exchange and the Philadelphia Stock Exchange. The high and
low sales prices reflected in the New York Stock Exchange
Composite Transactions as reported by The Wall Street Journal and
the dividends declared and paid per share are summarized as
follows:
1993 1992
High Low Dividend High Low Dividend
1st Quarter 41 1/2 33 $.270 27 3/4 23 1/2 $.257
2nd Quarter 40 3/4 36 7/8 .270* 27 3/4 23 3/8 .257*
3rd Quarter 44 1/4 35 1/4 .270 33 27 1/8 .257
4th Quarter 42 3/4 35 1/4 .285 34 1/8 31 .270
* Actually declared near the end of the preceding quarter.
(b)As of December 31, 1993, there were 8,994 shareholders of
record of the Company's common stock.
(c)(1)The indentures under which the Company's long-term debt is
outstanding contain provisions limiting the Company's right to declare
or pay dividends and make certain other distributions on, and to
purchase any shares of, its common stock. Under the most restrictive
of such provisions, $387,755,000 of the Company's consolidated
retained earnings at December 31, 1993, was available for declarations
or payments of dividends on, or purchases of its common stock.
(c)(2)The Company anticipates dividends will continue to be paid
on a regular quarterly basis.
Item 6. Selected Financial Data
1993 1992 1991 1990 1989
(Thousands Except Per Share Amounts)
Operating
revenues $1,094,794 $ 812,374 $ 679,631 $ 659,216 $ 511,540
Net income $73,455 $ 60,026 $ 64,168 $ 58,949 $ 50,874
Earnings per share of
common stock $2.27 $1.92 $2.05 $1.88 $1.62
Total assets* $1,946,907 $1,468,424 $1,440,593 $1,229,154 $1,187,951
Long-term debt $378,845 $346,693 $346,818 $254,725 $256,665
Cash dividends
declared per share
of common stock $1.10 $1.04 $1.00 $.91 $.86
* Total assets at December 31, 1989 through 1992 were restated to reflect the adoption of
Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
OVERVIEW
Equitable's consolidated net income for 1993 of $73.5
million, or $2.27 per share, was the second highest in the
Company's history. The 1993 results represent a 22 percent
increase over 1992 net income of $60.0 million, or $1.92 per
share, and a 14 percent increase over 1991 net income of $64.2
million, or $2.05 per share.
Earnings for all three years include income from regulatory
approvals for the recovery of higher wellhead prices for natural
gas produced and sold in prior years as more fully described in
Note B to the consolidated financial statements. The recovery
increased income by approximately $4.7 million for both 1993 and
1992 and $14.9 million for 1991.
The increase in net income for 1993 compared to 1992 is due
primarily to increases in production and average wellhead prices
for natural gas and increased margins from utility service
operations. These increases were partially offset by a $5
million increase in 1993 federal income taxes as a result of a
one percent increase in the federal corporate income tax rate as
more fully described in Note C to the consolidated financial
statements. The increase in net income for 1992 compared to
1991, excluding the effect of the direct billing settlements, is
the result of increased sales of produced gas and oil, higher
average wellhead prices for natural gas and increased retail gas
sales reflecting colder weather in 1992.
RESULTS OF OPERATIONS
This discussion supplements the detailed financial
information by business segment presented in Note K to the
consolidated financial statements.
ENERGY RESOURCES
Operating revenues were $743.1 million in 1993 compared with
$461.6 million in 1992 and $367.3 million in 1991. The increase
in revenues between the periods is due primarily to increases in
gas marketing activity, production and average wellhead prices
for natural gasand increased production of natural gas liquids in
1993. The increase in marketed natural gas and production of
natural gas liquids for 1993 is due primarily to the acquisition
of Louisiana Intrastate Gas Company (LIG) on June 30, 1993 as
more fully described in Note L to the consolidated financial
statements. Increased production of natural gas and oil for 1992
compared to 1991 reflects the full-year impact of 1991
acquisitions.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Energy Resources 1993 1992 1991
Operating Revenues (thousands):
Natural Gas:
Production . . . . . . . . $121,360 $ 92,864 $ 72,498
Marketing . . . . . . . . . 505,830 269,182 185,901
Oil . . . . . . . . . . . . 34,176 43,469 38,074
Natural Gas Liquids . . . . . 47,121 21,256 23,573
Direct Billing Settlements . 7,815 7,815 24,960
Other . . . . . . . . . . . . 26,762 27,056 22,291
Total Revenues . . . . . $743,064 $461,642 $367,297
Sales Quantities:
Natural Gas (MMcf):
Production . . . . . . . . 53,550 48,243 40,022
Marketing . . . . . . . . . 218,031 131,711 102,456
Oil (MBls) . . . . . . . . . 2,112 2,406 2,006
Natural Gas Liquids
(thousands of gallons) . . . 162,191 64,938 64,200
Gas purchased amounted to $533.7 million in 1993 compared
with $277.0 million in 1992 and $193.1 million in 1991. The
increased cost in 1993 reflects the increase in volume of
marketed natural gas and requirements for the higher production
level of natural gas liquids. The increase for 1992 is due to
the increase in volume of marketed natural gas.
Other operating expenses were $155.2 million in 1993, $143.4
million in 1992 and $127.6 million in 1991. Increases for the
respective years are attributed to increased production expenses,
depreciation and depletion related to the higher level of natural
gas production and the consolidation of LIG in 1993.
Operating income, excluding income from direct billing
settlements, was $46.4 million in 1993 compared with $33.4
million in 1992 and $21.6 million in 1991. The increase in
operating income for 1993 compared to 1992 reflects primarily the
increase in average wellhead prices and production of natural
gas. The increase for 1992 compared to 1991 is due mainly to
increased production of natural gas and oil and higher average
wellhead prices for gas.
Energy resource operations accounted for more than half of
consolidated net income in 1993. This was achieved through the
combination of improved wellhead prices for natural gas and
increased production realized from recent acquisitions as well as
ongoing development activity. Average wellhead prices increased
18 percent in 1993 and reached a level that has not been
experienced since 1988. Production was increased by 11 percent
in 1993 and represents a 34 percent increase since 1991 when
wellhead prices were at their lowest point in more than ten
years.
Appalachian gas reserves and acreage position remain a firm
foundation for the segment's strategy of traditional development
and expanding diversification into other areas. The recent
acquisition of LIG has enhanced expansion of marketing activities
in the Gulf coast area where the Company has been active in
natural gas production. LIG will serve as the nucleus for
development of a "market hub" with broad access in this area of
major production activity as well as interconnections with major
pipelines serving substantially all regions of the country.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
In 1994, the segment's $90.5 million capital expenditure
program includes $35.3 million for development of Appalachian
holdings, $24.6 million for the Rocky Mountain area, $17.2
million for off-shore drilling in the Gulf of Mexico and $2.6
million for participation in exploration in South America.
Bolstered by the frigid weather experienced in early 1994, the
Company believes the market for natural gas will sustain recent
price trends. Market and price trends will continue to be the
principal factors for the economic justification of drilling
investments under the 1994 program. In addition, $10.8 million
in the 1994 capital program is earmarked for other projects,
including further development of LIG. The Company is also
proceeding with plans to fund and develop storage and interchange
facilities which will interconnect with LIG and the Henry Hub.
These facilities will establish the capability to provide
services necessary for the creation of a separate market hub.
UTILITY SERVICES
Operating revenues, which are derived principally from the
sale and transportation of natural gas, were $397.3 million in
1993 compared with $393.6 million in 1992 and $381.7 million in
1991. The increase in revenues for 1993 compared to 1992 is due
to the full-year impact of a retail rate increase for
Pennsylvania customers that went into effect in July of 1992,
offset by lower retail rates to pass-through decreased purchased
gas costs to customers. The increase in revenues for 1992
compared to 1991 is due primarily to increased retail gas sales
resulting from colder weather which were offset somewhat by lower
off-system sales and transportation.
Utility Services 1993 1992 1991
Operating Revenues (thousands):
$314,312 $305,310 $291,955
Pipeline Gas Sales . . . . . 12,257 24,186 24,071
Transportation Service . . . 44,760 48,732 48,829
Storage Service . . . . . . . 6,927 5,553 5,935
Marketed Gas Sales . . . . . 10,200 - -
Other . . . . . . . . . . . . 8,841 9,847 10,865
Total Revenues . . . . . . $397,297 $393,628 $381,655
Sales Quantities (MMcf):
Retail Gas Sales . . . . . . 39,982 38,907 36,688
Pipeline Gas Sales . . . . . 2,814 5,779 5,823
Transportation . . . . . . . 66,272 71,166 70,897
Marketed Gas . . . . . . . . 4,052 - -
Heating Degree Days
(Normal - 5,968) . . . . . . 5,628 5,629 5,030
Gas purchased amounted to $153.6 million in 1993, $170.6
million in 1992 and $163.4 million in 1991. The decrease in gas
costs for 1993 reflects the pass-through of lower costs in rates
to retail customers. The increase in 1992 is due primarily to
the increase in retail sales volumes.
Other operating expenses amounted to $167.4 million in 1993,
$149.8 million in 1992 and $148.3 million in 1991. The increase
in other operating expenses for 1993 reflects increased labor and
employee benefits, increased depreciation, higher taxes other
than income, and recording of a reserve for possible refund of
interstate billings.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Operating income was $76.3 million in 1993 compared with
$73.2 million in 1992 and $70.0 million in 1991. The increase in
operating income for 1993 compared to 1992 is due primarily to
the full-year impact of the retail rate increase that went into
effect in July 1992. The increase in operating income for 1992
compared to 1991 is attributed to higher retail sales.
In May 1992, the Federal Energy Regulatory Commission (FERC)
issued new regulations, in its Order 636, that significantly
altered the manner in which natural gas is sold and transported
in interstate commerce. The main feature of the new regulations
requires pipelines to unbundle their services and rates by
function and permit customers to select one or more of the
services offered by the pipeline, i.e., transportation, storage,
etc. Under the new structure, local distribution utilities,
other marketers and end users will purchase their own gas supply
and use pipeline services for handling and transporting the gas.
The regulations require pipelines to establish new rates using a
straight fixed variable design. Under this method, all fixed
costs, including return on investment in facilities, are
recovered through a fixed demand or capacity charge based on peak
requirements reserved by customers. The vast majority of costs
in pipeline rates are fixed costs. The remaining variable costs
are recovered in commodity rates based on actual customer usage.
The regulations also provide a rate mechanism for pipelines to
recover prudently incurred transition costs as they move away
from the merchant function.
The Company's interstate pipelines, Kentucky West and
Equitrans, have successfully implemented their Order 636
restructured tariffs effective July 1, 1993 and September 1,
1993, respectively. All restructuring issues have been resolved
for Kentucky West. On September 2, 1993, Equitrans filed a new
rate case to address operational and transitional cost recovery
issues which were severed from its Order 636 compliance filing by
the FERC. On September 30, 1993, the FERC issued an order
accepting and suspending certain tariff provisions and rejecting
other conditions. The major area of difference was the timing
and method of recovering some $60 million of transition costs.
While Equitrans continues to recover other costs in restructured
rates, it has filed a request for rehearing with the FERC
regarding the recovery of transition costs.
CAPITAL RESOURCES AND LIQUIDITY
Operating Activities
Cash required for operations is impacted primarily by the
seasonal nature of the Company's utility operations. Gas
purchased for storage during the nonheating season is financed
with short-term loans which are repaid as gas is withdrawn from
storage and sold during the heating season. Short-term loans are
also used to provide other working capital requirements during
the nonheating season.
Investing Activities
The Company's business requires major ongoing expenditures
for replacements, improvements and additions to utility plant and
continuing development and expansion of its energy resources.
Such expenditures during 1993 were $339.4 million including
approximately $209 million for the purchase of LIG and Hershey
Oil Corporation as described in Note L to the consolidated
financial statements. A total of $151.2 million has been
authorized for the 1994 capital expenditure program, including
$90.5 million for energy resources.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Short-term loans are used as interim financing for a portion
of capital expenditures. The Company expects to finance its 1994
capital expenditures with cash generated from operations and
temporarily with short-term loans.
Capital expenditures, including acquisitions, totaled about
$865 million during the five- year period ended December 31,
1993, of which 45 percent was financed from operations.
Financing Activities
The Company believes it has adequate borrowing capacity to
meet its financing requirements. Bank loans and commercial
paper, supported by available credit, are used to meet short-term
financing requirements. Interest rates on these short-term loans
ranged from 2.94 percent to 3.78 percent during 1993. At
December 31, 1993, $189.9 million of commercial paper and $64.0
million of bank loans were outstanding at an average interest
rate of 3.30 percent. Lines of credit currently available to the
Company total $325 million which require commitment fees
averaging one-tenth of one percent. Adequate lines of credit are
expected to continue to be available in the future.
On September 29, 1993, the Company issued 3 million shares of
common stock at a price of $38.50 per share. Net proceeds of
approximately $111.6 million, after underwriters' commissions and
other issuance costs, were used to repay a portion of the short-
term debt incurred to purchase the stock of LIG.
The Company filed a shelf-registration in March 1992 to issue
$100 million of medium-term notes to be used primarily to retire
short-term loans incurred to finance a portion of acquisitions
made in 1991. Given the advantage of short-term interest rates
during 1992 and 1993, the Company issued only $24.5 million of
the medium-term notes during 1992 and an additional $32 million
during 1993. It is anticipated that the remaining $43.5 million
of medium-term notes will be issued in the first half of 1994.
As more fully described in Note H to the consolidated
financial statements, the Company has redeemed $31.6 million of
long-term debt during the past two years to further reduce
interest costs. These redemptions were temporarily financed with
short-term debt.
Accounting Developments
The Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109)
effective January 1, 1993 and elected to restate its financial
statements as of January 1, 1988. The Company also adopted SFAS
No. 106 "Employers' Accounting for Postretirement Benefits Other
Than Pensions" (OPEBS) effective January 1, 1993. The effect of
adoption of SFAS No. 109 and SFAS No. 106 are more fully
described in Notes C and E, respectively, to the consolidated
financial statements.
The effect of adoption of both standards on net income was
the deferral of increased expenses related to rate regulated
utility operations. At December 31, 1993, regulatory assets
related to deferred income taxes under SFAS No. 109 and
accounting for OPEBS under SFAS No. 106 were approximately $76.4
million and $2.9 million, respectively.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Federal Income Tax Provisions
In August 1993, the Omnibus Budget Reconciliation Act of 1993
(OBRA) was signed into law. One of the provisions of OBRA was to
raise the maximum corporate income tax rate from 34 percent to 35
percent. The effect of this tax rate change increased deferred
tax liabilities by approximately $11 million and increased
regulatory assets by approximately $6 million.
Cash flow has been affected by the Alternative Minimum Tax
(AMT) since 1988. Despite the availability of nonconventional
fuels tax credit, the Company has incurred an AMT liability in
each of the years 1988 through 1993. Although AMT payments can
be carried forward indefinitely and applied to income tax
liabilities in future periods, they reduce cash generated from
operations. At December 31, 1993, the Company has available
$69.3 million of AMT credit carryforwards. The collection of
revenues from direct billing settlements described in Note B to
the consolidated financial statements will improve cash flow with
the utilization of carryover credits. Nevertheless, the impact
of AMT on cash flow will continue to depend on the future levels
of energy prices. AMT is not expected to affect the Company's
ability to finance future capital requirements.
Under current law, wells drilled after 1992 do not qualify
for the nonconventional fuels tax credit. While production from
qualified Energy Resources' wells drilled in the Appalachian area
will generate tax credits through the year 2002, it is
anticipated that the amount of such credits will decline after
1993 as the related reserves are depleted. The credits recorded
in 1993, 1992 and 1991 reduced the Company's federal income tax
provisions by $20.6 million, $14.1 million and $11.0 million,
respectively.
Environmental Matters
Management does not know of any environmental liabilities
that will have a material effect on the Company's financial
position or results of operations. The Company has identified
situations that require remedial action for which $6.0 million is
accrued at December 31, 1993. The portion of amounts expensed
through 1993 that have been deferred and included in regulatory
assets amounts to $3.1 million. Environmental matters are
described in Note N to the consolidated financial statements.
Balance Sheet Changes
The increase in deferred purchased gas cost is due to the
timing of pass-through of gas costs to ratepayers. Changes in
deferred purchased gas cost generally do not affect results of
operations due to regulatory procedures for purchased gas cost
recovery in rates. Gas stored underground--current inventory
increased because all inventory is valued at average cost. See
Note A to the consolidated financial statements. The increases
in accounts receivable, accounts payable and other current
liabilities reflect mainly the consolidation of LIG and increased
marketing activities.
AUDIT COMMITTEE
The Audit Committee, composed entirely of outside directors,
meets periodically with the Company's independent auditors, its
internal auditor and management to review the Company's financial
statements and the results of audit activities. The Audit
Committee, in turn, reports to the Board of Directors on the
results of its review and recommends the selection of independent
auditors.
Item 8. Financial Statements and Supplementary Data
Page
Reference
Report of Independent Auditors 23
Statements of Consolidated Income
for each of the three years in
the period ended December 31, 1993 24
Consolidated Balance Sheets
December 31, 1993 and 1992 25 & 26
Statements of Consolidated Cash Flows
for each of the three years in the
period ended December 31, 1993 27
Statements of Common Stockholders'
Equity for each of the three
years in the period ended
December 31, 1993 28
Long-term Debt, December 31,
1993 and 1992 29
Notes to Consolidated Financial
Statements 30 - 47
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Equitable Resources, Inc.
We have audited the accompanying consolidated balance sheets
and statements of long-term debt of Equitable Resources, Inc.,
and Subsidiaries at December 31, 1993 and 1992, and the related
consolidated statements of income, common stockholders' equity
and cash flows for each of the three years in the period ended
December 31, 1993. Our audits also included the financial
statement schedules listed in the Index at Item 14(a). These
financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Equitable Resources, Inc., and Subsidiaries
at December 31, 1993 and 1992, and the consolidated results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1993 in conformity with
generally accepted accounting principles. Also, in our opinion,
the related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.
As described in Note C and Note E to the consolidated
financial statements, the Company changed its method of
accounting for income taxes and postretirement benefits in 1993.
s/ Ernst & Young
-------------------------------
Ernst & Young
Pittsburgh, Pennsylvania
February 22, 1994
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
(Thousands Except per
Share Amounts)
Operating Revenues $1,094,794 $812,374 $679,631
Cost of Gas Purchased 644,157 407,055 290,614
Net operating revenues 450,637 405,319 389,017
Operating Expenses:
Operation 174,420 161,972 159,214
Maintenance 29,024 26,327 24,441
Depreciation and depletion 76,894 65,940 54,593
Taxes other than income 39,802 36,654 34,192
Total operating expenses 320,140 290,893 272,440
Operating Income 130,497 114,426 116,577
Other Income (Expense) 1,706 1,781 (528)
Interest Charges 38,728 37,411 31,945
Income Before Income Taxes 93,475 78,796 84,104
Income Taxes 20,020 18,770 19,936
Net Income $ 73,455 $ 60,026 $ 64,168
Average Common Shares Outstanding 32,359 31,342 31,253
Earnings Per Share of Common Stock $2.27 $1.92 $2.05
See notes to consolidated financial statements
Pages 30 to 47, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1993 AND 1992
ASSETS
1993 1992
Restated
(Thousands)
Property, Plant and Equipment
(Successful Efforts Method):
Energy resources $1,203,599 $ 814,654
Less accumulated
depreciation and depletion 298,370 249,392
Net energy resources 905,229 565,262
Utility services 903,238 852,762
Less accumulated
depreciation and depletion 260,043 242,810
Net utility services 643,195 609,952
Net property, plant and equipment 1,548,424 1,175,214
Current Assets:
Cash and cash equivalents 15,037 11,590
Accounts receivable (less
accumulated provision for
doubtful accounts: 1993,
$10,106; 1992, $9,503) 171,626 121,568
Unbilled revenues 27,853 19,637
Gas stored underground - current inventory 18,059 12,983
Material and supplies 12,261 10,311
Deferred purchased gas cost 17,148 3,124
Prepaid expenses and other 23,977 21,704
Total current assets 285,961 200,917
Other Assets:
Regulatory assets 87,024 68,367
Other 25,498 23,926
Total other assets 112,522 92,293
Total $1,946,907 $1,468,424
See notes to consolidated financial statements
Pages 30 to 47, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1993 AND 1992
CAPITALIZATION AND LIABILITIES
1993 1992
Restated
(Thousands)
Capitalization:
Common stockholders' equity $ 728,030 $ 577,557
Long-term debt 378,845 346,693
Total capitalization 1,106,875 924,250
Current Liabilities:
Long-term debt payable within one year 1,971 16,445
Short-term loans 253,900 114,000
Accounts payable 143,808 92,127
Accrued taxes 15,358 12,126
Accrued interest 12,338 11,609
Refunds due customers 14,206 11,669
Customer credit balances 7,578 7,900
Other 14,794 4,753
Total current liabilities 463,953 270,629
Deferred and Other Credits:
Deferred income taxes 331,140 242,305
Deferred investment tax credits 23,178 24,551
Other 21,761 6,689
Total deferred and other credits 376,079 273,545
Commitments and Contingencies -
-
Total $1,946,907 $1,468,424
See notes to consolidated financial statements
Pages 30 to 47, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
(Thousands)
Cash Flows from Operating Activities:
Net income $ 73,455 $ 60,026 $ 64,168
Adjustments to reconcile
net income to net cash
provided by operating activities:
Depreciation and depletion 76,894 65,940 54,593
Deferred income taxes 756 (2,015) 3,974
Other - net 1,319 1,435 1,788
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues
(22,352) (8,035) (10,683)
Gas stored underground (5,076) 3,990 (8,877)
Material and supplies (709) (724) 1,976
Deferred purchased gas cost (14,024) 4,915 (2,871)
Regulatory assets (18,657) (2,870) (13,269)
Accounts payable 18,747 2,821 13,568
Accrued taxes 1,024 1,018 539
Refunds due customers 2,537 4,050 (540)
Other - net (4,588) 3,965 8,725
Total adjustments 35,871 74,490 48,923
Net cash provided by
operating activities 109,326 134,516 113,091
Cash Flows from Investing Activities:
Capital expenditures:
Energy resources
(including acquisitions) (296,245) (52,923) (189,472)
Utility services (43,166) (46,666) (45,717)
Proceeds from sale of property 1,270 6,872 910
Net cash used in
investing activities (338,141) (92,717) (234,279)
Cash Flows from Financing Activities:
Issuance of common stock 112,412 1,427 2,959
Purchase of treasury stock (28) (226) (6,018)
Dividends paid (35,279) (32,595) (31,254)
Proceeds from issuance of long-term debt 31,702 24,359 98,995
Repayments and retirements of long-term debt
(16,445) (15,995) (922)
Increase (decrease) in short-term loans 139,900 (15,500) 47,500
Net cash provided (used)
by financing activities 232,262 (38,530) 111,260
Net Increase (Decrease) in
Cash and Cash Equivalents 3,447 3,269 (9,928)
Cash and Cash Equivalents at
Beginning of Year 11,590 8,321 18,249
Cash and Cash Equivalents at End of Year $ 15,037 $ 11,590 $ 8,321
See notes to consolidated financial statements
Pages 30 to 47, inclusive
Cash Paid During the Year for:
Interest (net of amount capitalized) $ 34,592 $ 31,304 $ 24,605
Income taxes $ 27,547 $ 17,587 $ 20,793
See notes to consolidated financial statements
Pages 30 to 47, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
Common Stock(a) Foreign Common
Shares No Retained Currency Stockholders'
Outstanding Par Value Earnings Translation Equity
(Thousands)
Balance, January 1, 1991 31,300 $ 94,701 $433,801 $ - $528,502
Cumulative effect of change in
accounting for income taxes (11,889)
Balance, January 1, 1991 as
restated 31,300 94,701 421,912 516,613
Net income for the year 1991 64,168
Dividends ($1.00 per share) (31,254)
Stock issued:
Conversion of 9 1/2%
debentures 97 1,084
Restricted stock
option plan 167 4,073
Treasury stock (253) (6,018)
Balance, December 31, 1991 (b) 31,311 93,840 454,826 548,666
Net income for the year 1992 60,026
Dividends ($1.04 per share) (32,595)
Stock issued:
Conversion of 9 1/2%
debentures 23 259
Restricted stock
option plan 60 1,427
Treasury stock (8) (226)
Balance, December 31, 1992 (b) 31,386 95,300 482,257 577,557
Net income for the year 1993 73,455
Dividends ($1.10 per share) (35,279)
Foreign currency translation for the year 1993 (581)
Stock issued:
New stock issuance 3,000 111,570
Conversion of
9 1/2% debentures 51 564
Restricted stock
option plan 29 850
Cash paid in lieu
of fractional shares (78)
Treasury stock (1) (28)
Balance, December 31, 1993
(b)(c)(d) 34,465 $208,178 $520,433 $(581) $728,030
(a) Shares authorized: Common - 80,000,000 shares, Preferred - 3,000,000 shares.
(b) Net of treasury stock: 1993 - 622,000 shares ($14,623,000); 1992 - 621,000 shares ($14,595,000);
1991 - 613,000 shares ($14,368,000).
(c) A total of 1,154,000 shares of authorized but unissued common stock was reserved for the
conversion of the 9 1/2% convertible subordinated debentures, for issuance under the key
employee restricted stock option and stock appreciation rights incentive compensation plan and
for issuance under the company's dividend reinvestment and stock purchase plan.
(d) Retained earnings of $387,755,000 is available for dividends on, or purchase of, common stock
pursuant to restrictions imposed by indentures securing long-term debt.
See notes to consolidated financial statements
Pages 30 to 47, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
LONG-TERM DEBT
DECEMBER 31, 1993 AND 1992
Annual Debt Maturities After
Maturities One Year
1993 1992 1993 1992
(Thousands)
First mortgage bonds, series due
June 15, 1997, 8% $ - $16,445 $ - $ -
8 1/4% Debentures, due July 1, 1996 (a)
- - 75,000 75,000
7 1/2% Debentures, due July 1, 1999
($75,000 principal amount, net of
unamortized original issue discount)(a) - - 69,684 68,968
9 1/2% Convertible subordinated
debentures, due January 15, 2006 - - 2,661 3,225
9.9% Debentures, due April 15, 2013 (b) - - 75,000 75,000
Medium-term notes:
7.2% to 9.0% Series A,
due 1998 thru 2021 - - 100,000 100,000
5.1% to 7.4% Series B,
due 1995 thru 2023 - - 56,500 24,500
Other 1,971 - - -
Total $1,971 $16,445 $378,845 $346,693
(a) Not redeemable prior to maturity.
(b) Annual sinking fund payments of $3,750,000 are required beginning in 1999.
See notes to consolidated financial statements
Pages 30 to 47, inclusive
See notes to consolidated financial statements
Pages 30 to 47, inclusive
A. Summary of Significant Accounting Policies
(1)PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of Equitable Resources, Inc. and
Subsidiaries (the "Company" or "Companies"). All subsidiaries
are 100% owned.
(2)PROPERTIES, DEPRECIATION AND DEPLETION: The cost of
property additions, replacements and improvements capitalized
includes labor, material and overhead. The cost of property
retired, plus removal costs less salvage, is charged to
accumulated depreciation.
Depreciation for financial reporting purposes is provided on
the straight-line method at composite rates based on estimated
service lives, except for most gas and oil production properties
as explained below. Depreciation rates are based on periodic
studies.
The Company uses the successful efforts method of accounting
for exploration and production activities. Under this method,
the cost of productive wells and development dry holes, as well
as productive acreage, are capitalized and depleted on the unit-
of-production method. Capitalized acquisition costs of unproved
properties are periodically assessed for impairment of value, and
any loss is recognized at the time of impairment.
(3)ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION: The
Federal Energy Regulatory Commission (FERC) prescribes a formula
to be used for computing overhead allowances for funds used
during construction (AFC). AFC applicable to equity funds
capitalized is included in other income and amounted to
$1,022,000 in 1993, $1,297,000 in 1992 and $914,000 in 1991. AFC
applicable to borrowed funds, as well as other interest
capitalized for the nonregulated companies, is applied as a
reduction of interest charges and amounted to $1,841,000 in 1993,
$1,267,000 in 1992 and $1,263,000 in 1991
(4)INVENTORIES: Inventories are stated at cost which is
below market. Gas stored underground--current inventory at
December 31, 1993 of $18,059,000 is stated at cost under the
average cost method. The December 31, 1992 balance includes
$5,918,000, which is stated at cost under the last-in, first-out
method (LIFO). As a result of FERC Order 636, certain gas stored
underground has been transferred, at book value (LIFO), to
property, plant and equipment. This gas represents cushion gas
for the regulated interstate pipeline operations, a portion of
which will be necessary to compensate for gas imbalances until
replaced in-kind by customers. Material and supplies are stated
generally at average cost.
(5)INCOME TAXES: The Companies file a consolidated federal
income tax return. The current provision for income taxes
represents amounts paid or payable. Deferred income tax assets
and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities.
Where deferred tax liabilities will be passed through to
customers in regulated rates, the Company establishes a
corresponding regulatory asset for the increase in future
revenues that will result when the temporary differences reverse.
Investment tax credits realized in prior years were deferred
and are being amortized over the estimated service lives of the
related properties where required by ratemaking rules.
A. Summary of Significant Accounting Policies (Continued)
(6)DEFERRED PURCHASED GAS COST: Where permitted by
regulatory authorities under purchased gas adjustment clauses or
similar tariff provisions, the Companies defer the difference
between purchased gas cost, less refunds, and the billing of such
cost and amortize the deferral over subsequent periods in which
billings either recover or repay such amounts.
(7)REGULATORY ASSETS: Certain costs, which will be passed
through to customers under ratemaking rules for regulated
operations, are deferred by the Company as regulatory assets.
The amounts deferred relate primarily to the accounting for
income taxes.
(8)CASH FLOWS: The Company considers all highly liquid
investments with a maturity of three months or less when
purchased to be cash equivalents.
(9)RECLASSIFICATION: Certain amounts contained in prior
year comparative information have been reclassified to conform
with the 1993 presentation.
B. Direct Billing Settlements
In 1990, a subsidiary, Kentucky West Virginia Gas Company,
received FERC approval of settlement agreements with all
customers, except Columbia Gas Transmission Company, for the
direct billing to recover the higher Natural Gas Policy Act
(NGPA) prices which the FERC had denied on natural gas produced
from energy resource properties between 1978 and 1983. The
settlements were individually negotiated and contain differing
terms providing for the collection of $100.3 million over periods
ranging from four to ten years. The recovery of $85 million of
the $89 million settlement with the Equitable Gas division was
subject to Pennsylvania Public Utility Commission (PUC) review as
described below. The agreements that were fully approved were
recorded at present value using a discount rate of 9%.
In 1991, the Equitable Gas division received PUC approval to
recover $25 million of increased gas costs relating to the FERC
settlement, including $4.9 million of additional carrying
charges. The PUC also approved the recovery of $7.8 million
relating to the settlement in each of the years 1993 and 1992.
The amounts approved increased net income reported for the third
quarter of 1993 and 1992 by $4.7 million and $14.9 million for
the third quarter of 1991. Approximately $49 million from the
settlement remains to be recovered in future gas cost filings
with the PUC over the next seven years.
A final settlement proposal negotiated with Columbia for the
recovery of $19 million was approved by the FERC in February
1993. The settlement agreement has been accepted in Columbia's
bankruptcy proceeding. However, in view of Columbia's pending
reorganization under Chapter 11 of the Bankruptcy Code, the
amount of recovery from Columbia remains uncertain and therefore
has not been recognized.
C. Income Taxes
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
No. 109) effective January 1, 1993 and elected to restate prior
period financial statements for the effect of the change. As of
January 1, 1988, retained earnings was reduced by approximately
$12 million; periodic net income since that date was not restated
because the effect of the change in accounting on all periods
reported was not material. Application of the new rules
increased deferred income tax liabilities at January 1, 1992 by
approximately $77 million and created regulatory assets of
approximately $65 million.
The sources and tax effects of the temporary differences are
as follows:
December 31,
1993 1992
(Thousands)
Deferred tax liabilities (assets):
Exploration and development costs
expensed for income tax reporting
$138,089 $124,254
Tax depreciation in excess of
book depreciation . . . . . . 250,032 141,183
Regulatory temporary differences 36,841 28,710
Deferred purchased gas cost . . . 8,413 2,423
Alternative minimum tax . . . . . (69,333) (48,920)
Investment tax credit . . . . . . (10,340) (10,121)
Other . . . . . . . . . . . . . . (21,829) 4,958
Total (including amounts classified
as current liabilities of $733
for 1993 and $182 for 1992) . $331,873 $242,487
As of December 31, 1993 and 1992, $76.4 million and $68.4
million, respectively, of the net deferred tax liabilities are
related to rate regulated operations and have been deferred as
regulatory assets.
Income tax expense is summarized as follows:
Years Ended December 31,
1993 1992 1991
(Thousands)
Current:
Federal . . . . . . . .
$15,577 $13,540 $11,770
State . . . . . . . . . 3,687 7,245 4,192
Deferred:
Federal . . . . . . . . (2,758) (4,547) 1,254
State . . . . . . . . . 3,514 2,532 2,720
Total . . . . . . . . $20,020 $18,770 $19,936
C. Income Taxes (Continued)
Provisions for income taxes are less than amounts computed
at the federal statutory rate of 35% for 1993 and 34% for 1992
and 1991 on pretax income. The reasons for the difference are
summarized as follows:
Years Ended December 31,
1993 1992 1991
(Thousands)
Tax at statutory rate .
$ 32,716 $ 26,791 $28,595
State income taxes . . . 4,332 6,453 4,562
Increase in federal
income tax rate . . . . 5,070 - -
Nonconventional fuels tax
credit . . . . . . . . (20,600) (14,051) (10,998)
Other . . . . . . . . . (1,498) (423) (2,223)
Income tax expense . . $ 20,020 $ 18,770 $ 19,936
Effective tax rate . . . 21.4% 23.8% 23.7%
In August 1993, the Omnibus Budget Reconciliation Act of
1993 (Act) was signed into law. One of the provisions of the Act
was to raise the maximum corporate income tax rate from 34% to
35%. The effect of this tax rate change increased deferred tax
liabilities by approximately $11 million and increased regulatory
assets by approximately $6 million.
The consolidated federal income tax liability of the
Companies has been settled through 1990.
The Company has available $69.3 million of alternative
minimum tax credit carryforward which has no expiration date. In
addition, the Company has net operating loss carryforwards for
federal income tax purposes of $13.8 million which begin to
expire in 2006. The net operating loss carryforwards are the
result of the acquisition of Louisiana Intrastate Gas Company as
described in Note L.
Amortization of deferred investment tax credits amounted to
$1,373,000 for 1993, $1,138,000 for 1992 and $850,000 for 1991.
D. Employee Pension Benefits
The Companies have several trusteed retirement plans
covering substantially all employees. The Companies' annual
contributions to the plans are based on a 25-year funding level.
Plans covering union members generally provide benefits of stated
amounts for each year of service. Plans covering salaried
employees use a benefit formula which is based upon employee
compensation and years of service to determine benefits to be
provided. Plan assets consist principally of equity and debt
securities.
D. Employee Pension Benefits (Continued)
The following table sets forth the plans' funded status and
amounts recognized in the Company's consolidated balance sheets:
December 31,
1993 1992
(Thousands)
Actuarial present value
of benefit obligations:
Vested benefit obligation $132,402 $112,372
Accumulated benefit obligation $135,809 $115,192
Market value of plan assets $159,433 $149,351
Projected benefit obligation 148,265 124,100
Excess of plan assets over projected
benefit obligation 11,168 25,251
Unrecognized net asset (3,237) (3,664)
Unrecognized net gain (16,732) (27,305)
Unrecognized prior service cost 10,403 8,246
Prepaid pension cost recognized in
the consolidated balance sheets $ 1,602 $ 2,528
At year-end the discount rate used in determining the
actuarial present value of benefit obligations was 7 1/4% for
1993, 8 1/4% for 1992 and 8 1/2% for 1991. The assumed rate of
increase in compensation levels was 4 1/2% for 1993 and 5% for
1992 and 1991.
The Companies' pension cost, using a 9% average rate of
return on plan assets at the beginning of 1993 and 1992 and 8
1/2% for 1991, comprised the following:
Years Ended December 31,
1993 1992 1991
(Thousands)
Service cost benefits earned
during the period $ 2,806 $ 2,345 $ 2,726
Interest cost on projected
benefit obligation 10,472 9,917 10,305
Actual return on assets (17,224) (18,214) (27,681)
Net amortization and deferral 5,486 7,069 16,946
Net periodic pension cost $ 1,540 $ 1,117 $ 2,296
E. Other Postretirement Benefits
In addition to providing pension benefits, the Companies
provide certain health care and life insurance benefits for
retired employees and their dependents. Substantially all
employees are eligible for these benefits upon retirement from
the Companies.
E. Other Postretirement Benefits (Continued)
SFAS No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (OPEBS) requires, among other
things, the accrual of retirement health care and life insurance
benefits during the years an employee provides services. The new
standard requires that the accumulated plan benefit obligation
existing at the date of adoption (transition obligation) either
be recognized immediately or deferred and amortized over future
periods.
Historically, the Company recognized the cost of retiree
health care and life insurance benefits as paid and has retained
the right to modify or discontinue these benefits at any time.
However, the Company was required to adopt the new standard
effective January 1, 1993 and will amortize the resulting
transition obligation over 20 years. In determining the
accumulated postretirement benefit obligation at January 1, 1993,
the Company used an inflation factor for medical costs beginning
at 13% per year, which decreases gradually thereafter to 6%
within 15 years and a discount rate of 8 1/4%. At December 31,
1993, the beginning inflation factor was 11% decreasing gradually
to 4 3/4% within 17 years and the discount rate was 7 1/4%. The
following summarizes the status of the Company's accrued OPEBS:
December 31, January 1,
1993 1993
(Thousands)
Accumulated postretirement
benefit obligation:
Retired employees $ 23,078 $ 24,971
Active employees: 8,942 7,361
Fully eligible
Other 16,741 13,780
Total obligation 48,761 46,112
Unrecognized net gain 40 -0-
Unrecognized transition
obligation (43,806) (46,112)
Accrued postretirement
benefit cost $ 4,995 $ -0-
The net periodic cost for postretirement health care and life
insurance benefits for 1993 includes the following:
1993
(Thousands)
Service cost . . . . . . . . . . . . . . . . . $1,065
Interest cost . . . . . . . . . . . . . . . . 3,936
Amortization of transition obligation . . . . 2,306
Periodic cost . . . . . . . . . . . . . . . . $7,307
E. Other Postretirement Benefits (Continued)
As of December 31, 1993, $2.9 million of the accrued OPEBS
related to rate regulated operations have been deferred as regulatory
assets. Rate filings will be made to seek full recovery of the costs
accrued under SFAS No. 106 over periods of up to 20 years.
An increase of one percent in the assumed medical cost inflation
rate would increase the accumulated postretirement benefit obligation
by 8% and would increase the periodic cost by 10%.
The Company paid current claims for OPEBS of $3,421,000 in 1993.
The cost of OPEBS for 1992 and 1991 was recognized as paid and
amounted to $2,919,000 and $3,537,000, respectively.
F. Common Stock
(1) Common Stock Issuance
On September 29, 1993, the Company issued 3 million shares of
common stock at a price of $38.50 per share. Net proceeds after
underwriters' commissions and other issuance costs were approximately
$111.6 million. The proceeds were used to repay a portion of the
short-term debt incurred to purchase the stock of Louisiana Intrastate
Gas Company as described in Note L.
(2) Restricted Stock Options and Awards
The Equitable Resources, Inc., Key Employee Restricted Stock
Option and Stock Appreciation Rights Incentive Compensation Plan is
nonqualified and provides for the granting of restricted stock awards
or options to purchase common stock of the Company at prices ranging
from 75% to 100% of market value on the date of grant. Stock options
may be granted with or without stock appreciation units. Options
expire five years from the date of grant. Stock awarded under the
Plan or purchased through the exercise of options, and the value of
certain stock appreciation units, are restricted and subject to risk
of forfeiture should an optionee terminate employment prior to
specified vesting dates. In 1991, restricted stock awards of 41,625
shares were made to key employees. The Company used treasury shares
repurchased from plan participants for these awards.
F. Common Stock (Continued)
The following schedule summarizes the stock option activity:
Years Ended December 31,
1993 1992 1991
Options outstanding January 1 139,725 228,787 286,820
Granted 148,543 - 99,000
Exercised (33,325) (89,062) (152,158)
Canceled, forfeited, surrendered
or expired (1,875) - (4,875)
Options outstanding December 31 253,068 139,725 228,787
Average price of options
$18.97 $17.07 $15.14
At December 31:
Prices of options outstanding $17.50 $15.20 $15.20
to to to
$36.50 $20.13 $21.59
Average option price
$29.69 $19.76 $18.71
Shares reserved for issuance 671,349 705,209 794,558
(3)Dividend Reinvestment and Stock Purchase Plan
Pursuant to this plan, stockholders can reinvest dividends and
make limited additional investments in shares of common stock. Shares
issued through the plan have been acquired on the open market.
Beginning in 1994, shares issued through the plan may continue to be
acquired on the open market or by issuance of previously unissued
shares. At December 31, 1993, 241,314 shares of common stock were
reserved for issuance under the plan.
G. Short-Term Loans
Maximum lines of credit available to the Company were
$360,000,000 during 1993, $140,000,000 during 1992 and $180,000,000
during 1991. The Company is not required to maintain compensating
bank balances. Commitment fees averaging one-tenth of one percent are
paid to maintain credit availability.
G. Short-Term Loans (Continued)
At December 31, 1993, short-term loans consisted of $189,900,000
of commercial paper and $64,000,000 of bank loans; and at December 31,
1992, $79,000,000 and $35,000,000, respectively. The maximum amounts
of outstanding short-term loans were $339,000,000 in 1993,
$130,500,000 in 1992 and $153,000,000 in 1991. The average daily
total of short-term loans outstanding was approximately $174,900,000
during 1993, $107,389,000 during 1992 and $61,535,000 during 1991;
weighted average annual interest rates applicable thereto were 3.3% in
1993, 3.8% in 1992 and 5.9% in 1991.
H. Long-Term Debt
The Company filed a shelf registration in March 1992 to issue
$100 million of Medium-Term Notes--Series B to be used primarily to
retire short-term loans incurred to temporarily finance a portion of
1991 acquisitions. Through December 31, 1993, the Company issued
$56.5 million of Medium-Term Notes. These notes have maturity dates
ranging from three to thirty years and a weighted average interest
rate of 6.30%. Considering the advantage of lower short-term interest
rates, the Company has delayed issuance of the remaining notes.
On March 31, 1993, the Company redeemed $16.4 million of First
Mortgage Bonds, 8% series due June 15, 1997. The bonds were redeemed
at 101.05 percent of the principal amount thereof, plus accrued
interest through the date of redemption. On August 3, 1992, the
Company redeemed $8.6 million of 9% Debentures due June 15, 1996. The
debentures were redeemed at 100.79 percent of the principal amount
thereof, plus accrued interest through the date of redemption. On
March 2, 1992, the Company redeemed $6.6 million of First Mortgage
Bonds, 6 1/4% series due September 1, 1992.
The 9 1/2% Convertible Subordinated Debentures are convertible at
any time into common stock at a conversion price of $11.06 per share.
During 1993, 1992 and 1991, $564,000, $259,000 and $1,084,000 of
these debentures were converted into 50,983, 23,399 and 97,983 shares
of common stock, respectively. At December 31, 1993, 240,918 shares
of common stock were reserved for conversions.
Interest expense on long-term debt amounted to $33,161,000 in
1993, $31,899,000 in 1992 and $25,318,000 in 1991. Aggregate
maturities of long-term debt will be $1,971,000 in 1994, $24,500,000
in 1995, $75,000,000 in 1996, none in 1997 and $5,000,000 in 1998.
I. Fair Value of Financial Instruments
The carrying value of cash and cash equivalents as well as short-
term loans approximates fair value due to the short maturity of the
instruments.
I. Fair Value of Financial Instruments (Continued)
The estimated fair value of long-term debt, including the portion
due within one year, at December 31, 1993 and 1992 would be
$433,048,000 and $388,642,000, respectively. The fair value was
estimated based on the quoted market prices as well as the discounted
values using a current discount rate reflective of the remaining
maturity. The Company's 8 1/4% Debentures and 7 1/2% Debentures may
not be redeemed prior to maturity. The 9.9% Debentures require
payment of premiums for early redemption, exclusive of annual sinking
fund requirements.
J. Concentrations of Credit Risk
Energy resources operating revenues and related accounts
receivable are generated primarily from gas marketing activities, the
sale of produced natural gas, natural gas liquids and oil and
intrastate transportation of gas. The gas marketing activities are
nationwide to large volume customers for resale or end use. Produced
natural gas is sold primarily to utility and industrial customers
located mainly in the Appalachian area. Produced natural gas liquids
are sold to refinery customers in Louisiana and Kentucky. Produced
oil is sold to refinery customers in the Rocky Mountain and
Appalachian areas. The intrastate gas transportation is concentrated
in Louisiana.
Utility services operating revenues and related accounts
receivable are generated through regulated interstate pipeline and
natural gas utility sales, transportation and storage services.
Interstate natural gas sales, transportation and storage services are
to the affiliated utility, Equitable Gas, as well as other utility and
end-user customers located in nine mid-Atlantic and northeastern
states. Utility sales and transportation services are provided to
more than 265,000 residential, commercial and industrial customers
located in southwest Pennsylvania and parts of West Virginia and
Kentucky. Under state regulations, the utility is required to provide
continuous gas service to residential customers during the winter
heating season. In this regard, the Company continually reviews the
credit worthiness of customers and, when necessary, requests deposits
to secure future service.
The Company is not aware of any significant credit risks which
have not been recognized in provisions for doubtful accounts.
K. Financial Information by Business Segment
The Company reports its operations in two business
segments energy resources and utility services. Energy resource
activities comprise exploration, development, production, gathering
and marketing of natural gas and oil, intrastate transportation of
natural gas, extraction and sale of natural gas liquids and contract
drilling. Utility service activities comprise primarily a natural gas
utility and three regulated gas pipelines.
K. Financial Information by Business Segment (Continued)
The following table sets forth financial information for each of
the two business segments:
Years Ended December 31,
1993 1992 1991
(Thousands)
Operating Revenues:
Energy Resources $ 743,064 $ 461,642 $ 367,297
Utility Services 397,297 393,628 381,655
Sales between segments (45,567) (42,896) (69,321)
Total $1,094,794 $ 812,374 $ 679,631
Operating Income:
Energy Resources $ 54,153 $ 41,198 $ 46,605
Utility Services 76,344 73,228 69,972
Total $ 130,497 $ 114,426 $ 116,577
Net Income:
Energy Resources $ 38,000 $ 29,502 $ 31,929
Utility Services 35,455 30,524 32,239
Total $ 73,455 $ 60,026 $ 64,168
Identifiable Assets (a):
Energy Resources $1,085,407 $ 696,801 $ 695,907
Utility Services 906,920 822,064 801,209
Eliminations (45,420) (50,441) (56,523)
Total $1,946,907 $1,468,424 $1,440,593
Depreciation and Depletion:
Energy Resources $ 53,423 $ 45,638 $ 36,002
Utility Services 23,471 20,302 18,591
Total $ 76,894 $ 65,940 $ 54,593
Capital Expenditures:
Energy Resources
(including acquisitions) $ 296,245 $ 52,923 $ 189,472
Utility Services 43,166 46,666 45,717
Total $ 339,411 $ 99,589 $ 235,189
(a) Amounts for 1992 and 1991 have been restated for the effect of
adoption of SFAS No. 109 as described in Note C.
L. Acquisitions
On June 30, 1993, the Company purchased the outstanding common
stock of Louisiana Intrastate Gas Company (LIG) for $191 million. LIG
owns a 1,900 mile intrastate pipeline system in Louisiana, four
natural gas processing plants and is also engaged in gas marketing.
The purchase was funded initially with short-term debt, a portion of
which was repaid with the proceeds from the issuance of common stock
as described in Note F to the consolidated financial statements.
Under terms of the purchase agreement, the seller, and/or the previous
owner of LIG, have indemnified the Company against losses resulting
from claims of liability under gas purchase contracts and
substantially all environmental liabilities attributable to operation
of LIG prior to June 30, 1993.
On July 8, 1993, the Company purchased all of the outstanding
stock of Hershey Oil Corporation (Hershey) for approximately $18
million. Hershey's assets consist primarily of approximately 68
billion cubic feet of proved natural gas reserves and 17,000 net
undeveloped acres in Alberta, Canada.
The acquisitions were accounted for under the purchase method
and are included in the energy resource segment. Had the purchases
occurred as of the beginning of 1993 and 1992, unaudited proforma
consolidated results for the Company would have been: revenues of
$1.119 billion and $872 million; net income of $74.0 million and $68.6
million; and earnings per share of $2.29 and $2.19 for the years ended
December 31, 1993 and 1992, respectively.
M. Purchase of Properties
On September 30, 1991, the Company purchased oil and gas
properties in the Rocky Mountain area for approximately $64 million.
The purchase, which was effective July 1, 1991, includes interests in
approximately 400 wells and 438,000 net acres situated primarily in
Wyoming, Montana, North Dakota and Utah. On November 25, 1991, the
Company purchased gas properties and drilling programs in the
Appalachian Basin for approximately $75 million. The purchase, which
was effective September 1, 1991, includes properties located in
western Virginia consisting of approximately 200 producing wells,
218,000 net acres and 205 miles of gathering and transmission lines
which are connected to a major interstate pipeline. In both cases,
the entire purchase price was attributed to the properties.
N. Commitments and Contingencies
Rent expense was $9,834,000 in 1993, $9,333,000 in 1992 and
$8,353,000 in 1991. Long-term leases are principally for division
operating headquarters and warehouse buildings and computer hardware
and have renewal options ranging to 20 years from December 31, 1993.
Future minimum rentals for all noncancelable long-term leases at
December 31, 1993 are as follows: 1994, $5,448,000; 1995, $4,605,000;
1996, $3,622,000; 1997, $3,137,000; 1998, $2,803,000 and $15,424,000
thereafter for a total of $35,039,000.
Utility Services has annual commitments of approximately $43
million for demand charges under existing long-term contracts with
pipeline suppliers for periods extending up to 9 years at December 31,
1993. However, substantially all of these costs are recoverable in
customer rates.
The Company is subject to federal, state and local environmental
laws and regulations. These laws and regulations, which are
constantly changing, can require expenditures for remediation and may
in certain instances result in assessment of fines. The Company has
established procedures for on-going evaluation of its operations to
identify potential environmental exposures and assure compliance with
regulatory policies and procedures.
On-going expenditures for compliance with environmental laws and
regulations, including investments in plant and facilities to meet
environmental requirements, have not been material. Management
believes that any such required expenditures will not be significantly
different in either their nature or amount in the future.
The estimated costs associated with identified situations that
require remedial action are accrued. However, certain of these costs
are deferred when recoverable by claims against third parties or
through regulated rates. Management does not know of any
environmental liabilities that will have a material effect on the
Company's financial position or results of operations.
As described in Note B, the Company has a claim in Columbia Gas
Transmission Company's bankruptcy proceeding related to the direct
billing settlements. In addition, the Company has various claims
against Columbia for abrogation of contracts to purchase gas from the
Company. The amount that may be realized, if any, under the claims
cannot be estimated in view of Columbia's bankruptcy proceeding.
O. Interim Financial Information (Unaudited)
The following quarterly summary of operating results reflects
variations due primarily to the seasonal nature of the Company's
business and the activities of new subsidiaries from the date of
acquisition as described in Note L.
March June September December
31 30 30 31
(Thousands except per share amounts)
1993
Operating revenues $269,819 $207,782 $272,745 $344,448
Operating income 55,349 13,978 24,787 36,383
Net income 30,795 8,831 8,612 25,217
Earnings per share $.98 $.28 $.27 $.73
1992
Operating revenues $245,208 $161,352 $144,429 $261,385
Operating income 50,351 8,678 14,358 41,039
Net income 26,105 3,626 7,161 23,134
Earnings per share $.83 $.12 $.23 $.74
P. Natural Gas and Oil Producing Activities
The supplementary information summarized below presents the
results of natural gas and oil activities for the Energy Resource
segment in accordance with SFAS No. 69, "Disclosures About Oil and Gas
Producing Activities."
The information presented excludes data associated with natural
gas reserves related to rate regulated operations. These reserves
(proved developed) are less than 5% of total Company proved reserves
for the years presented.
P. Natural Gas and Oil Producing Activities (Continued)
(1)Production Costs
The following table presents the costs incurred relating to
natural gas and oil production activities:
1993 1992 1991
(Thousands)
At December 31:
Capitalized costs . . . $836,638 $748,325 $718,140
Accumulated depreciation
and depletion . . . . 256,508 216,005 187,321
Net capitalized costs . $580,130 $532,320 $530,819
Costs incurred :
Property acquisition:
Proved properties . . $29,345 $ 663 $119,308
Unproved properties . - - 20,806
Exploration . . . . . . 13,928 13,166 22,924
Development . . . . . . 62,336 46,321 37,498
(2) Results of Operations for Producing Activities
The following table presents the results of operations related to
natural gas and oil production:
1993 1992 1991
(Thousands)
Revenues:
Affiliated . . . . . . $ 15,467 $ 8,964 $ 16,407
Nonaffiliated . . . . 140,380 127,369 94,165
Production costs . . . . 33,620 30,385 25,971
Exploration expenses . . 13,559 16,439 17,144
Depreciation and depletion 43,841 40,744 31,863
Income tax expense . . . 5,039 5,221 2,748
Results of operations from
producing activities
(excluding corporate
overhead) . . . . . . . $ 59,788 $ 43,544 $ 32,846
P. Natural Gas and Oil Producing Activities (Continued)
(3) Reserve Information (Unaudited)
The information presented below represents estimates of proved
gas and oil reserves prepared by Company engineers. Proved developed
reserves represent only those reserves expected to be recovered from
existing wells and support equipment. Proved undeveloped reserves
represent proved reserves expected to be recovered from new wells
after substantial development costs are incurred. Substantially all
reserves are located in the United States.
Natural Gas 1993 1992 1991
(Millions of Cubic Feet)
Proved developed and
undeveloped reserves:
Beginning of year 720,032 695,898 620,755
Revision of previous
estimates 9,399 25,736 (2,959)
Purchase of natural gas
in place - net 86,113(a) 434 89,925
Extensions, discoveries
and other additions
Production (53,550) (48,243) (40,022)
End of year 822,583(b) 720,032 695,898
Proved developed reserves:
Beginning of year 665,194 621,846 528,573
End of year 759,282(c) 665,194 621,846
(a) Includes 68,000 MMcf purchased in Canada.
(b) Includes 70,000 MMcf proved reserves in Canada.
(c) Includes 46,000 MMcf proved developed reserves in Canada.
P. Natural Gas and Oil Producing Activities (Continued)
Oil 1993 1992 1991
(Thousands of Barrels)
Proved developed and
undeveloped reserves:
Beginning of year 20,023 19,427 12,253
Revision of previous
estimates (4,876) 951 (309)
Purchase (sale) of oil in
place - net 418(a) (138) 7,907
Extensions, discoveries
and other additions 3,015 2,189 1,582
Production (2,112) (2,406) (2,006)
End of year 16,468(b) 20,023 19,427
Proved developed reserves:
Beginning of year 18,540 17,072 11,166
End of year 16,442(c) 18,540 17,072
(a) Includes 68,000 barrels purchased in Canada.
(b) Includes 65,000 barrels proved reserves in Canada.
(c) Includes 39,000 barrels proved developed reserves in Canada.
(4) Standard Measure of Discounted Future Cash Flows (Unaudited)
Management cautions that the standard measure of discounted
future cash flows should not be viewed as an indication of the fair
market value of gas and oil producing properties, nor of the future
cash flows expected to be generated therefrom. The information
presented does not give recognition to future changes in estimated
reserves, selling prices or costs and has been discounted at an
arbitrary rate of 10%. Estimated future net cash flows from natural
gas and oil reserves based on selling prices and costs at year-end
price levels are as follows:
1993 1992 1991
(Thousands)
Future cash inflows $2,140,151 $2,058,973 $1,835,380
Future production costs (598,707) (551,987) (462,367)
Future development costs (24,579) (41,612) (63,243)
Future income tax expenses (434,362) (409,970) (351,087)
Future net cash flow 1,082,503 1,055,404 958,683
10% annual discount for
estimated timing of
cash flows (515,023) (507,082) (456,624)
Standardized measure of
discounted future net
cash flows $ 567,480(a) $ 548,322 $ 502,059
(a) Includes $31,267,000 in Canada.
Summary of changes in the standardized measure of discounted
future net cash flows:
1993 1992 1991
(Thousands)
Sales and transfers of gas
and oil produced - net $ (122,227) $ (105,948) $ (84,601)
Net changes in prices, production
and development costs (80,256) 11,370 (141,414)
Extensions, discoveries, and
improved recovery, less
related costs 90,035 77,759 43,188
Development costs incurred 18,482 27,807 25,588
Purchase (sale) of minerals
in place - net 62,843 (142) 120,533
Revisions of previous
quantity estimates (14,910) 1,709 (4,440)
Accretion of discount 69,284 62,548 64,829
Net change in income taxes (8,584) (21,093) 49,691
Other 4,491 (7,747) (9,150)
Net increase 19,158 46,263 64,224
Beginning of year 548,322 502,059 437,835
End of year $ 567,480 $ 548,322 $ 502,059
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not Applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information required by Item 10 with respect to directors is
incorporated herein by reference to the section describing "Election
of Directors" in the Company's definitive proxy statement relating to
the annual meeting of stockholders to be held on May 27, 1994, which
will be filed with the Commission within 120 days after the close of
the Company's fiscal year ended December 31, 1993.
Information required by Item 10 with respect to executive
officers is included herein after Item 4 at the end of Part I.
Item 11. Executive Compensation
Information required by Item 11 is incorporated herein by
reference to the section describing "Executive Compensation",
"Employment Contracts and Change-In-Control Arrangements" and "Pension
Plan" in the Company's definitive proxy statement relating to the
annual meeting of stockholders to be held on May 27, 1994.
Item 12.Security Ownership of Certain Beneficial
Owners and Management
Information required by Item 12 is incorporated herein by
reference to the section describing "Voting Securities and Record
Date" in the Company's definitive proxy statement relating to the
annual meeting of stockholders to be held on May 27, 1994.
Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) 1. Financial statements
The financial statements listed in the accompanying
index to financial statements and financial statement
schedules (page 51) are filed as part of this annual
report.
2. Financial statement schedules
The financial statement schedules listed in the
accompanying index to financial statements and
financial statement schedules (page 51) are filed as
part of this annual report.
3. Exhibits
The exhibits listed on the accompanying index to
exhibits (pages 62 through 65) are filed as part of
this annual report.
(b) Reports on Form 8-K filed during the quarter ended
December 31, 1993.
None
(c) Each management contract and compensatory arrangement
in which any director or any named executive officer
participates has been marked with an asterisk (*) in
the Index to Exhibits.
EQUITABLE RESOURCES, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES COVERED BY REPORT OF INDEPENDENT AUDITORS
(Item 14 (a))
1. The following consolidated financial statements of Equitable
Resources, Inc. and Subsidiaries are included in Item 8:
Page Reference
Statements of Consolidated Income
for each of the three years in
the period ended December 31, 1993 24
Consolidated Balance Sheets
December 31, 1993 and 1992 25 & 26
Statements of Consolidated Cash Flows
for each of the three years in the
period ended December 31, 1993 27
Statements of Common Stockholders'
Equity for each of the three years in the
period ended December 31, 1993 28
Long-term Debt, December 31, 1993 and 1992 29
Notes to Consolidated Financial Statements 30 thru 47
2. Schedules for the Years Ended December 31,
1993, 1992 and 1991 included in Part IV:
V - Property, Plant and Equipment 52, 53 & 54
VI - Accumulated Depreciation,
Depletion and Amortization 55, 56, 57, 58
of Property, Plant and Equipment & 59
VIII- Valuation and Qualifying
Accounts and Reserves 60
X - Supplementary Income Statement
Information 61
Schedules I, II, III, IV, VII, XI, XII, XIII and XIV are
omitted since the subject matter thereof is either not present or
is not present in amounts sufficient to require submission of the
schedules as permitted by Regulation S-X.
The information called for in Schedule IX is set forth in
the consolidated balance sheet and notes to consolidated financial
statements.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
Column A Column B Column C Column D Column E Column F
Balance at Other Changes Balance at
Beginning Additions End of
Classifications Period at Cost Retirements Add Deduct Period
(Thousands)
Property, Plant and Equipment (at original cost):
Energy Resources:
Gas:
In service:
Natural gas and
oil production $ 738,239 $101,158 $ 8,572 $ $ $ 830,825
General 38,386 17,867 1,168 55,085
Total gas plant
in service 776,625 119,025 9,740 885,910
Construction work
in progress 11,864 141(B) 12,005
Total gas plant 788,489 119,166 9,740 897,915
Gas liquids extraction 26,165 17,738 43,903
Intrastate transmission 263,018 1,237 61,781
Total Energy
Resources 814,654 399,922 10,977 1,203,599
Utility Services:
Gas:
In service:
Intangible 6,089 2,529 272 8,346
Production 130,545 1,438 1,163 130,820
Storage 56,320 15,153 164 15,069(A) 86,378
Transmission 126,020 10,548 1,160 135,408
Distribution 445,015 18,944 2,992 460,967
General 55,641 1,376 1,998 55,019
Total gas plant
in service 819,630 49,988 7,749 15,069 876,938
Construction work
in progress 32,437 (6,822)(B) 25,615
Held for future use 263 10 253
Total gas plant 852,330 43,166 7,759 15,069 902,806
Other 432 432
Total Utility
Services 852,762 43,166 7,759 15,069 903,238
Total $1,667,416 $443,088 $18,736 $15,069 $ $2,106,837
Notes:
A. Reclassification from gas stored underground--current inventory. See Note A to the consolidated
financial statements.
B. Net change in construction work in progress.
C. There were no other significant and unusual additions, abandonments, or retirements, or any
significant and unusual changes in the general character and location of principal plants and other
important units.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
Column A Column B Column C Column D Column E Column F
Balance at Other Changes Balance at
Classifications Beginning Additions Note (A) End of
of Period at Cost Retirements Add Deduct Period
(Thousands)
Property, Plant and Equipment (at original cost):
Energy Resources:
Gas:
In service:
Natural gas and
oil production $ 711,604 $43,375 $16,740 $ $ $ 738,239
General 35,451 5,046 1,854 257 38,386
Total gas plant
in service 747,055 48,421 18,594 257 776,625
Construction work
in progress 7,475 4,389(B) 11,864
Total gas plant 754,530 52,810 18,594 257 788,489
Gas liquids extraction 26,058 113 6 26,165
Total Energy
Resources 780,588 52,923 18,600 257 814,654
Utility Services:
Gas:
In service:
Intangible 4,584 1,555 50 6,089
Production 127,149 4,015 761 198 56 130,545
Storage 51,886 4,442 8 56,320
Transmission 122,046 4,484 368 56 198 126,020
Distribution 427,679 18,078 742 445,015
General 51,416 6,050 1,825 55,641
Total gas plant
in service 784,760 38,624 3,754 254 254 819,630
Construction work
in progress 24,293 7,887(B) 257 32,437
Held for future use 269 6 263
Total gas plant 809,322 46,511 3,760 511 254 852,330
Heating and Cooling:
In service . 11,916 11,916
Construction work
In progress
Held for future use 21 21
Total heating
and cooling 11,937 11,937
Other 277 155 432
Total Utility
Services 821,536 46,666 15,697 511 254 852,762
Total $1,602,124 $99,589 $34,297 $511 $511 $1,667,416
Notes:
A. Reclassifications of property resulting from change in function.
B. Net change in construction work in progress.
C. There were no other significant and unusual additions, abandonments, or retirements, or any
significant and unusual changes in the general character and location of principal plants and
other important units.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
Column A Column B Column C Column D Column E Column F
Balance at Other Changes Balance
Beginning Additions (Note A) at End of
Classifications of Period at Cost Retirements Add Deduct Period
(Thousands)
Property, Plant and Equipment (at original cost):
Energy Resources:
Gas:
In service:
Natural gas and
oil production $ 532,142 $186,225 $ 6,763 $ $ $ 711,604
General 29,963 5,749 261 35,451
Total gas plant
in service 562,105 191,974 7,024 747,055
Construction work
in progress 10,657 (3,182)(B) 7,475
Total gas plant 572,762 188,792 7,024 754,530
Gas liquids extraction 25,378 680 26,058
Total Energy
Resources 598,140 189,472 7,024 780,588
Utility Services:
Gas:
In service:
Intangible 4,557 27 4,584
Production 121,849 5,874 574 127,149
Storage 51,432 543 89 51,886
Transmission 115,257 6,850 61 122,046
Distribution 412,245 17,008 1,574 427,679
General 45,531 6,846 961 51,416
Total gas plant
in service 750,871 37,148 3,259 784,760
Construction work
in progress 15,918 8,375(B) 24,293
Held for future use 269 269
Total gas plant 767,058 45,523 3,259 809,322
Heating and Cooling:
In service . 11,727 221 32 11,916
Construction work
in progress 27 (27)(B)
Held for future use 21 21
Total heating
and cooling 11,775 194 32 11,937
Other 3,124 2,847 277
Total Utility
Services 781,957 45,717 6,138 821,536
Total $1,380,097 $235,189 $13,162 $ $ $1,602,124
Notes:
A. Reclassifications of property resulting from change in function.
B. Net change in construction work in progress.
C. There were no other significant and unusual additions, abandonments, or retirements, or any
significant and unusual changes in the general character and location of principal plants and
other important units.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLAN AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
Column A Column B Column C Column D Column E Column F
Additions Other Changes
Balance at Charged to Add (Deduct) Balance at
Description (Note A) Beginning Costs and Retirements Describe End of
of Period Expenses Period
(Thousands)
Energy Resources:
Gas Plant:
Depreciation:
Portion classified by
functions of property:
Natural gas and
oil production $216,395 $42,951 $ 2,338 $ $257,008
General 16,712 4,084 972 19,824
Total depreciation
and depletion
on gas plant 233,107 47,035 3,310 276,832
Gas liquids extraction 16,285 1,590 17,875
Intrastate transmission 4,918 1,255 3,663
Total Energy
Resources 249,392 53,543 4,565 298,370
Utility Services:
Gas plant:
Depreciation:
Portion classified by
functions of property:
Intangible plant 3,018 1,209 407 3,820
Production plant 59,723 3,403 1,160 61,966
Storage plant 18,940 1,274 156 (207) 19,851
Transmission plant 42,153 3,237 1,126 207 44,471
Distribution plant 96,538 11,655 3,808 104,385
General plant 20,673 4,804 1,998 23,479
Total depreciation 241,045 25,582 8,655 257,972
Retirement work in progress (632) (217)(B) (415)
Amortization and storage
land and land rights 1,566 95 8 1,653
Amortization and depletion
of producing natural
gas land and land rights 458 4 12 10 460
Held for future use
Total depreciation
and depletion
on gas plant 242,437 25,681 8,458 10 259,670
Heating and Cooling
Other physical property 373 373
Total Utility
Services 242,810 25,681 8,458 10 260,043
Total $492,202 $79,224 $13,023(C) $ 10 $558,413
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLAN AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
Column A Column B Column C Column D Column E Column F
Balance At Additions
Beginning Charged To Other Changes Balance at
Description (Note A) of Period Costs and Retirements Add (Deduct) End of
Expenses Describe Period
(Thousands)
Energy Resources:
Gas Plant:
Depreciation:
Portion classified by
functions of property:
Natural gas and oil
production $187,606 $40,834 $12,045 $ $216,395
General 14,299 3,695 1,282 16,712
Total depreciation
and depletion
on gas plant 201,905 44,529 13,327 233,107
Gas liquids extraction 15,181 1,109 5 16,285
Total Energy
Resources 217,086 45,638 13,332 249,392
Utility Services:
Gas plant:
Depreciation:
Portion classified by
functions of property:
Intangible plant 2,148 920 50 3,018
Production plant 57,408 3,146 913 82 59,723
Storage plant 17,919 1,022 8 7 18,940
Transmission plant 39,603 2,990 351 (89) 42,153
Distribution plant 88,730 10,143 2,173 (162) 96,538
General plant 18,103 4,032 1,624 162 20,673
Total depreciation 223,911 22,253 5,119 241,045
Retirement work in
progress (1,531) (899)(B) (632)
Amortization and storage
land and land rights 1,484 82 1,566
Amortization and depletion
of producing natural
gas land and land
rights 452 6 458
Held for future use 5 5
Total depreciation
and depletion
on gas plant 224,316 22,346 4,225 242,437
Heating and Cooling 4,381 4,381
Other physical property 218 155 373
Total Utility
Services 228,915 22,501 8,606 242,810
Total $446,001 $68,139 $21,938(C) $ $492,202
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLAN AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
Column A Column B Column C Column D Column E Column F
Balance At Additions Other Changes
Beginning Charged to Add (Deduct) Balance at
Description (Note A) of Period Costs and Retirements Describe End of
Expenses Period
(Thousands)
Energy Resources:
Gas Plant:
Depreciation:
Portion classified by
functions of property:
Natural gas and oil
production $160,806 $31,926 $ 5,126 $ $187,606
General 11,539 3,006 246 14,299
Total depreciation
and depletion
on gas plant 172,345 34,932 5,372 201,905
Gas liquids extraction 14,112 1,069 15,181
Total Energy
Resources 186,457 36,001 5,372 217,086
Utility Services:
Gas plant:
Depreciation:
Portion classified by
functions of property:
Intangible plant 1,208 940 2,148
Production plant 55,414 2,971 993 16 57,408
Storage plant 17,029 977 87 17,919
Transmission plant 36,818 2,839 54 39,603
Distribution plant 81,012 9,515 1,781 (16) 88,730
General plant 15,521 3,357 775 18,103
Total depreciation 207,002 20,599 3,690 223,911
Retirement work in progress (1,434) 97(B) (1,531)
Amortization and storage
land and land rights 1,407 77 1,484
Amortization and depletion
of producing natural
gas land and land
rights 444 8 452
Held for future use
Total depreciation
and depletion
on gas plant 207,419 20,684 3,787 224,316
Heating and Cooling 4,710 (297) 32 4,381
Other physical property 3,069 (6) 2,845 218
Total Utility
Services 215,198 20,381 6,664 228,915
Total $401,655 $56,382 $12,036(C) $ $446,001
EQUITABLE RESOURCES, INC.
NOTES TO SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993
(Thousands)
A. Includes $1,859 depreciation of automotive equipment charged to
transportation clearing account and then distributed principally to
various operating expenses and construction accounts.
B. Net change in retirement work in progress.
C. Retirements shown in Schedule V, Property, Plant and Equipment are
reconciled with the amounts shown in Column D of this schedule as
deductions from accumulated retirement reserves, as follows:
Retirements or sales as shown in Schedule V $18,736
Add - Cost of removal 798 $19,534
Deduct:
Salvage 1,276
Retirements not charged to reserve 5,235
Retirements, renewals and replacements as
shown in Column D of this schedule $13,023
1992
(Thousands)
A. Includes $2,022 depreciation of automotive equipment charged to
transportation clearing account and then distributed principally to
various operating expenses and construction accounts.
B. Net change in retirement work in progress.
C. Retirements shown in Schedule V, Property, Plant and Equipment are
reconciled with the amounts shown in Column D of this schedule as
deductions from accumulated retirement reserves, as follows:
Retirements or sales as shown in Schedule V $34,297
Add - Cost of removal 243 $34,540
Deduct:
Salvage 2,311
Retirements not charged to reserve 10,291
Retirements, renewals and replacements as
shown in Column D of this schedule $21,938
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
NOTES TO SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1991
(Thousands)
A. Includes $1,791 depreciation of automotive equipment charged to
transportation clearing account and then distributed principally to
various operating expenses and construction accounts.
B. Net change in retirement work in progress.
C. Retirements shown in Schedule V, Property, Plant and Equipment are
reconciled with the amounts shown in Column D of this schedule as
deductions from accumulated retirement reserves, as follows:
Retirements or sales as shown in Schedule V $13,162
Add - Cost of removal 726 $13,888
Deduct:
Salvage 914
Retirements not charged to reserve 938
Retirements, renewals and replacements as
shown in Column D of this schedule $12,036
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
Column A Column B Column C Column D Column E
Balance At Additions Charged Balance
Beginning To Costs At End
Description Of Period and Expenses Deductions Of Period
(Thousands)
1993
Accumulated Provision
for Doubtful
Accounts $9,503 $9,352 $8,749(A) $10,106
1992
Accumulated Provision
for Doubtful
Accounts $8,722 $8,998 $8,217(A) $9,503
1991
Accumulated Provision
for Doubtful
Accounts $7,531 $8,534 $7,343(A) $8,722
Note:
(A) Customer accounts written off, less recoveries.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
Column A Column B
Charged to
Item Costs and Expenses
1993 1992 1991
(Thousands)
1. Maintenance and repairs $29,024 $26,327 $24,441
2. Depreciation and amortization
of intangible assets (Note A) (Note A) (Note A)
3. Taxes other than payroll
and income taxes:
Pennsylvania gross receipts $14,837 $12,233 $13,268
State severance taxes 8,970 8,581 6,853
Other 10,707 10,978 9,225
Total $34,514 $31,792 $29,346
4. Royalties (Note B) $14,978 $15,736 $13,780
5. Advertising costs (Note A) (Note A) (Note A)
Notes:
(A) Not material in amount.
(B) Substantially all royalties are reflected as a reduction of gas
and oil revenues in the financial statements.
EXHIBITS DESCRIPTION METHOD OF FILING
2.01 (a) Stock Purchase Agreement Filed as Exhibit 2.1 (a)
dated May 5, 1993 among to Form 8-K Dated June 30,
Arkla, Inc., Arkla Finance 1993
Corporation and Equitable
Pipeline Company for the
purchase of Louisiana
Intrastate Gas Company
2.01 (b) Schedule 4.1.11 to the Filed as Exhibit 2.1 (b)
Stock Purchase Agreement to Form 8-K Dated June 30,
pertaining to outstanding 1993
litigation claims
2.01 (c) Schedule 4.1.15 to the Filed as Exhibit 2.1 (c)
Stock Purchase Agreement to Form 8-K Dated June 30,
pertaining to environmental 1993
matters
2.01 (d) Letter Agreement Dated June Filed as Exhibit 2.1 (d)
30, 1993 amending the Stock to Form 8-K Dated June 30,
Purchase Agreement 1993
3.01 Restated Articles of Filed herewith at page 68
Incorporation of the
Company dated May 21, 1993
(effective May 27, 1993)
3.02 By-Laws of the Company Filed herewith at page 77
(amended through December
17, 1993
4.01 (a) Indenture dated as of April Filed as Exhibit 4.01
1, 1983 between the Company (Revised) to Post-
and Pittsburgh National Effective Amendment No. 1
Bank relating to Debt to Registration Statement
Securities (Registration No. 2-80575)
4.01 (b) Instrument appointing Refiled herewith at page
Bankers Trust Company as 96 pursuant to Rule 24 of
successor trustee to SEC's Rules of Practice
Pittsburgh National Bank
4.01 (c) Resolution adopted June 26, Refiled herewith at page
1986 by the Finance 106 pursuant to Rule 24 of
Committee of the Board of SEC's Rules of Practice
Directors of the Company
establishing the term of
the $75,000,000 of
debentures, 8 1/4% Series
due July 1, 1996
4.01 (d) Resolutions adopted June Refiled herewith at page
22, 1987 by the Finance 109 pursuant to Rule 24 of
Committee of the Board of SEC's Rules of Practice
Directors of the Company
establishing the terms of
the 75,000 units
(debentures with warrants)
issued July 1, 1987
4.01 (e) Resolution adopted April 6, Refiled herewith at page
1988 by the Ad Hoc Finance 118 pursuant to Rule 24 of
Committee of the Board of SEC's Rules of Practice
Directors of the Company
establishing the terms and
provisions of the 9.9%
Debentures issued April 14,
1988
4.01 (f) Supplemental indenture Filed as Exhibit 4.3 to
dated March 15, 1991 with Form S-3 (Registration
Bankers Trust Company Statement 33-39505) filed
eliminating limitations on August 21, 1991
liens and additional funded
debt
4.01 (g) Resolution adopted August Filed as Exhibit 4.05 to
19, 1991 by the Ad Hoc Form 10-K for the year
Finance Committee of the ended December 31, 1991
Board of Directors of the
Company Addenda Nos. 1 thru
27, establishing the terms
and provisions of the
Series A Medium-Term Notes
EXHIBITS DESCRIPTION METHOD OF FILING
4.01 (h) Resolutions adopted July 6, Filed as Exhibit 4.05 to
1992 and February 19, 1993 Form 10-K for the year
by the Ad Hoc Finance ended December 31, 1992
Committee of the Board of
Directors of the Company
and Addenda Nos. 1 thru 8,
establishing the terms and
provisions of the Series B
Medium-Term Notes
*10.01 Equitable Resources, Inc. Filed as Exhibit 10.07 to
Key Employee Restricted Form 10-K for the year
Stock Option and Stock ended December 31, 1989
Appreciation Rights
Incentive Compensation Plan
(as amended through March
17, 1989)
*10.02(a) Employment Agreement dated Refiled herewith at page
as of March 18, 1988 with 126 pursuant to Rule 24 of
Frederick H. Abrew SEC's Rules of Practice
*10.02(b) Amendment effective June 1, Refiled herewith at page
1989 to Employment 153 pursuant to Rule 24 of
Agreement with Frederick H. SEC's Rules of Practice
Abrew
*10.03(a) Employment Agreement dated Refiled herewith at page
as of March 18, 1988 with 154 pursuant to Rule 24 of
Augustine A. Mazzei, Jr. SEC's Rules of Practice
*10.03(b) Amendment effective June 1, Refiled herewith at page
1989 to Employment 181 pursuant to Rule 24 of
Agreement with Augustine A. SEC's Rules of Practice
Mazzei, Jr.
*10.04(a) Agreement dated December Filed as Exhibit 10.16 to
15, 1989 with Barbara B. Form 10-K for the year
Sullivan for deferred ended December 31, 1989
payment of 1990 director
fees
*10.04(b) Agreement dated December Filed as Exhibit 10.16 to
21, 1990 with Barbara B. Form 10-K for the year
Sullivan for deferred ended December 31, 1990
payment of 1991 director
fees
*10.04(c) Agreement dated December Filed as Exhibit 10.16 to
13, 1991 with Barbara B. Form 10-K for the year
Sullivan for deferred ended December 31, 1991
payment of 1992 director
fees
*10.04(d) Agreement dated December Filed herewith at page 182
28, 1993 with Barbara B.
Sullivan for deferred
payment of 1994 director
fees
* 10.05 Supplemental Executive Filed herewith at page 187
Retirement Plan (as amended
and restated through
December 17, 1993)
*10.06 Retirement Program for the Filed as Exhibit 10.19 to
Board of Directors of Form 10-K for the year
Equitable Resources, Inc. ended December 31, 1989
(as amended through August
1, 1989)
*10.07 Supplemental Pension Plan Filed herewith at page 197
(as amended and restated
through December 17, 1993)
*10.08 Policy to Grant Filed as Exhibit 10.21 to
Supplemental Deferred Form 10-K for the year
Compensation Benefits in ended December 31, 1989
Selected Instances to a
Select Group of Management
or Highly Compensated
Employees (as amended and
restated through August 1,
1989)
EXHIBITS DESCRIPTION METHOD OF FILING
*10.09(a) Equitable Resources, Inc. Filed as Exhibit 10.22 to
and Subsidiaries Short-Term Form 10-K for the year
Incentive Compensation Plan ended December 31, 1987
dated January 18, 1988
*10.09(b) Amendment dated February Filed as Exhibit 10.22 to
17, 1993 to Equitable Form 10-K for the year
Resources, Inc. and ended December 31, 1992
Subsidiaries Short-Term
Incentive Compensation Plan
*10.10(a) Agreement dated December Refiled herewith at page
31, 1987 with Malcolm M. 206 pursuant to Rule 24 of
Prine for deferred payment SEC's Rules of Practice
of 1988 director fees
*10.10(b) Agreement dated December Refiled herewith at page
30, 1988 with Malcolm M. 211 pursuant to Rule 24 of
Prine for deferred payment SEC's Rules of Practice
of 1989 director fees
*10.11(a) Agreement dated September Refiled herewith at page
30, 1986 with Daniel M. 216 pursuant to Rule 24 of
Rooney for deferred payment SEC's Rules of Practice
of 1986 and 1987 director
fees
*10.11(b) Agreement dated December Refiled herewith at page
21, 1987 with Daniel M. 221 pursuant to Rule 24 of
Rooney for deferred payment SEC's Rules of Practice
of 1988 director fees
*10.11(c) Agreement dated December Refiled herewith at page
30, 1988 with Daniel M. 226 pursuant to Rule 24 of
Rooney for deferred payment SEC's Rules of Practice
of 1989 director fees
*10.11(d) Agreement dated December Filed as Exhibit 10.27 to
15, 1989 with Daniel M. Form 10-K for the year
Rooney for deferred payment ended December 31, 1989
of 1990 director fees
*10.11(e) Agreement dated December Filed as Exhibit 10.27 to
21, 1990 with Daniel M. Form 10-K for the year
Rooney for deferred payment ended December 31, 1990
of 1991 director fees
*10.11(f) Agreement dated December Filed as Exhibit 10.27 to
13, 1991 with Daniel M. Form 10-K for the year
Rooney for deferred payment ended December 31, 1991
of 1992 director fees
*10.11(g) Agreement dated December Filed as Exhibit 10.27 to
18, 1992 with Daniel M. Form 10-k for the year
Rooney for deferred payment ended December 31, 1992
of 1993 director fees
*10.11(h) Agreement dated December Filed herewith at page 231
14, 1993 with Daniel M.
Rooney for deferred payment
of 1994 director fees
10.12 Trust Agreement with Filed as Exhibit 10.28 to
Pittsburgh National Bank to Form 10-K for the year
act as Trustee for ended December 31, 1989
Supplemental Pension Plan,
Supplemental Deferred
Compensation Benefits,
Retirement Program for
Board of Directors, and
Supplemental Executive
Retirement Plan
EXHIBITS DESCRIPTION METHOD OF FILING
11.01 Statement re Computation of Filed herewith at page 236
Earnings Per Share
21 Schedule of Subsidiaries Filed herewith at page 237
23.01 Consent of Independent Filed herewith at page 238
Auditors
99.01 Equitable Resources, Inc. Filed herewith at page 239
Employees Savings Plan Form
11-K Annual Report
The Company agrees to furnish to the Commission, upon request,
copies of instruments with respect to long-term debt which have not
previously been filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EQUITABLE RESOURCES, INC.
(Registrant)
By: s/ Donald I. Moritz
(Donald I. Moritz)
Chairman and Chief Executive
Officer
Date: March 18, 1994
Pursuant to the requirements of the Securities and Exchange Act
of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Chairman and Chief Executive
Officer and Director
s/ Donald I. Moritz (Principal Executive Officer) March 18, 1994
Donald I. Moritz
Vice President and Treasurer
s/ Robert E. Daley (Chief Financial Officer) March 18, 1994
Robert E. Daley
Vice President - Accounting
and Administration
s/ Joseph L. Giebel (Chief Accounting Officer) March 18, 1994
Joseph L. Giebel
President and
Chief Operating Officer
s/ Frederick H. Abrew and Director March 18, 1994
Frederick H. Abrew
Director March 18, 1994
Clifford L. Alexander, Jr.
s/ Merle E. Gilliand Director March 18, 1994
Merle E. Gilliand
SIGNATURES (Continued)
s/ E. Lawrence Keyes, Jr. Director March 18, 1994
E. Lawrence Keyes, Jr.
s/ Thomas A. McConomy Director March 18, 1994
Thomas A. McConomy
Director March 18, 1994
Malcolm M. Prine
s/ Daniel M. Rooney Director March 18, 1994
Daniel M. Rooney
Director March 18, 1994
David S. Shapira
s/ Barbara Boyle Sullivan Director March 18, 1994
Barbara Boyle Sullivan