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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, 1994
[ ] 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 Percent Debentures due
July 1, 1999 New York Stock Exchange
9 1/2 Percent 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, 1995: $961,673,725
The number of shares outstanding of the issuer's classes of common stock as
of February 28, 1995: 34,654,909
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 26, 1995, to be filed with the Commission within 120 days after the
close of the Company's fiscal year ended December 31, 1994.
Index to Exhibits - Page 54.
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 51
Index to Financial Statements and Financial Statement
Schedules Covered by Report of Independent
Auditors 52
Index to Exhibits 54
Signatures 58
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 operating 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.
(b) and (b) (1) Beginning in 1994, the Company expanded the reporting
of its business operations to four business segments: exploration and
production, natural gas marketing, natural gas distribution and natural gas
transmission. Financial information by business segment is presented in
Note L to the consolidated financial statements contained in Part II.
(b)(2) Not applicable.
(c)(1) EXPLORATION AND PRODUCTION. Exploration and production
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 sells
natural gas and oil, extracts and markets natural gas liquids and performs
contract drilling and well maintenance services.
The exploration and production segment 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 the Southwest and Gulf Coast offshore areas, this segment
participates in exploration and development of gas and oil projects.
Exploration and production 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.
NATURAL GAS MARKETING. Natural gas marketing activiites are conducted
by ERMCO and its subsidiaries. Its activities include marketing of natural
gas, extraction, and sale of natural gas liquids and intrastate
transportation.
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. In 1994, ERMCO was granted a Federal Energy Regulatory
Commission (FERC) certificate for electricity wholesaling.
In Louisiana, LIG provides intrastate transportation of gas and
extracts and markets natural gas liquids.
NATURAL GAS DISTRIBUTION. Natural gas distribution activities
comprise the operations of Equitable Gas Company, the Company's state-
regulated natural gas utility.
Equitable Gas is 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.
Natural gas distribution services 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 the natural gas transmission segment.
NATURAL GAS TRANSMISSION. Natural gas transmission activities are
conducted by three FERC-regulated gas pipelines: Kentucky West, Equitrans,
and Nora. Activities include gas transportation, gathering, storage, and
marketing activities.
Kentucky West is an open access natural gas pipeline company. Prior
to restructuring pursuant to FERC Order 636, Kentucky West purchased gas
from the exploration and production 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 the natural gas marketing
segment. With the FERC Order 636 restructuring, which was effective July
1, 1993, Kentucky West provides open-access transportation service.
Transportation service is provided to Equitable Gas, Equitrans, the
exploration and production segment, 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 has 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 and markets natural gas. 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 transports the exploration and production segment's gas produced
in Virginia and Kentucky.
(c) (1) (i) Operating revenues as a percentage of total operating
revenues for each of the four business segments during the years 1992
through 1994 are as follows:
1994 1993 1992
Exploration and Production:
Natural gas production 9 percent 10 percent 10 percent
Oil 2 3 5
Natural gas liquids 1 2 3
Contract drilling 1 1 3
Other - 1 1
--- --- ---
Total Exploration
and Production 13 17 22
--- --- ---
Natural Gas Marketing:
Natural gas marketing 51 45 32
Natural gas liquids 4 2 -
Transportation 1 1 -
--- --- ---
Total Natural Gas Marketing 56 48 32
--- --- ---
Natural Gas Distribution:
Residential 19 23 30
Commercial 5 5 7
Industrial and utility 2 1 1
Transportation 2 2 2
--- --- ---
Total Natural
Gas Distribution 28 31 40
--- --- ---
Natural Gas Transmission:
Industrial and utility - - 1
Marketed gas 1 1 -
Transportation 1 2 4
Storage 1 1 1
--- --- ---
Total Natural
Gas Transmission 3 4 6
--- --- ---
Total Revenues 100 percent 100 percent 100 percent
=== === ===
See Note L to the Consolidated Financial Statements in Part II
regarding financial information by business segment.
(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 1992 through 1994.
1994
Exploration Natural Gas Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
Gas Produced, Purchased and Sold (MMcf):
Produced 62,507 143 1,871 64,521
------- -------- ------ ------- ------- -------
Purchased:
Other producers 389,710 45,632 7,263 442,605
Inter-segment purchases 2,523 47,920 12,963 472 (63,878)
------- ------- ------ ------- ------- -------
Total purchases 2,523 437,630 58,595 7,735 (63,878) 442,605
------- ------- ------ ------- ------- -------
Total produced and purchased 65,030 437,630 58,738 9,606 (63,878) 507,126
Deduct:
Net increase (decrease) in gas in storage 241 (181) 60
Extracted natural gas liquids
(equivalent gas volumes) 1,546 6,377 7,923
System use and unaccounted for 480 1,602 6,391 268 8,741
------- ------- ------ ------- ------- -------
Total 63,004 429,651 52,106 9,519 (63,878) 490,402
======= ======= ====== ======= ======= =======
Gas Sales (MMcf):
Residential 29,570 29,570
Commercial 9,681 9,681
Industrial and Utility 12,855 388 (3,576) 9,667
Production 62,507 (7,237) 55,270
Marketing 497 429,651 9,131 (53,065) 386,214
------- ------- ------ ------- ------- -------
Total 63,004 429,651 52,106 9,519 (63,878) 490,402
======= ======= ====== ======= ======= =======
Natural Gas Transported (MMcf) 103,726 8,611 123,472 (100,472) 135,337
======= ====== ======= ======== =======
Oil Produced and Sold (thousands of bls) 1,986 1,986
Natural Gas Liquids Sold
(thousands of gallons) 51,032 194,493 245,525
Average Selling Price:
Residential Gas Sales (per Mcf) $8.974
Commercial Gas Sales 6.916
Industrial and Utility Gas Sales 2.478 $5.951
Produced Natural Gas $1.949
Marketed Natural Gas 1.873 $1.932 2.327
Oil (per barrel) 14.723
Natural Gas Liquids (per gallon) .299 .263
1993
Exploration Natural Gas Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
Gas Produced, Purchased and Sold (MMcf):
Produced 53,550 144 1,828 55,522
------ ------- ------ ------ ------- -------
Purchased:
Other producers 221,948 21,583 30,287 273,818
Inter-segment purchases 3,598 35,531 24,773 6,227 (70,129)
------ ------- ------ ------ ------- -------
Total purchases 3,598 257,479 46,356 36,514 (70,129) 273,818
------ ------- ------ ------ ------- -------
Total produced and purchased 57,148 257,479 46,500 38,342 (70,129) 329,340
Deduct:
Net increase in gas in storage 3,904 2,300 6,204
Extracted natural gas liquids
(equivalent gas volumes) 3,005 3,162 6,167
System use and unaccounted for 294 801 2,614 5,645 9,354
------ ------- ------ ------ ------- -------
Total 53,849 253,516 39,982 30,397 (70,129) 307,615
====== ======= ====== ====== ======= =======
Gas Sales (MMcf):
Residential 29,980 29,980
Commercial 8,235 8,235
Industrial and Utility 1,767 25,387 (23,872) 3,282
Production 53,550 (3,719) 49,831
Marketing 299 253,516 4,052 (41,580) 216,287
------ ------- ------ ------ ------- -------
Total gas sales 53,849 253,516 39,982 29,439 (69,171) 307,615
Processed gas extracted 958 (958)
------ ------- ------ ------ ------- -------
Total 53,849 253,516 39,982 30,397 (70,129) 307,615
====== ======= ====== ====== ======= =======
Natural Gas Transported (MMcf) 50,659 10,986 88,550 (67,892) 82,303
======= ====== ====== ======= =======
Oil Produced and Sold (thousands of bls) 2,112 2,112
Natural Gas Liquids Sold
(thousands of gallons) 60,973 101,218 162,191
Average Selling Price:
Residential Gas Sales (per Mcf) $8.247
Commercial Gas Sales 7.171
Industrial and Utility Gas Sales 4.537 $4.237
Produced Natural Gas $2.236
Marketed Natural Gas 2.659 $2.231 2.517
Oil (per barrel) 16.182
Natural Gas Liquids (per gallon) .321 .272
1992
Exploration Natural Gas Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
Gas Produced, Purchased and Sold (MMcf):
Produced 48,243 225 2,473 50,941
------ ------- ------ ------ ------- -------
Purchased:
Other producers 131,711 11,037 31,938 174,686
Inter-segment purchases 3,137 30,424 30,918 8,489 (72,968)
------ ------- ------ ------ ------- -------
Total purchases 3,137 162,135 41,955 40,427 (72,968) 174,686
------ ------- ------ ------ ------- -------
Total produced and purchased 51,380 162,135 42,180 42,900 (72,968) 225,627
Deduct:
Net increase (decrease) in gas in storage 677 (4,381) (3,704)
Extracted natural gas liquids
(equivalent gas volumes) 2,061 2,061
System use and unaccounted for 593 2,596 10,584 13,773
------ ------- ------ ------ ------- -------
Total 48,726 162,135 38,907 36,697 (72,968) 213,497
====== ======= ====== ====== ======= =======
Gas Sales (MMcf):
Residential 30,089 30,089
Commercial 8,097 8,097
Industrial and Utility 721 34,636 (31,511) 3,846
Production 48,243 (4,491) 43,752
Marketing 483 162,135 (34,905) 127,713
------ ------- ------ ------ ------- -------
Total gas sales 48,726 162,135 38,907 34,636 (70,907) 213,497
Processed gas extracted 2,061 (2,061)
------ ------- ------ ------ ------- -------
Total 48,726 162,135 38,907 36,697 (72,968) 213,497
====== ======= ====== ====== ======= =======
Natural Gas Transported (MMcf) 13,080 79,015 (56,382) 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:
Residential Gas Sales (per Mcf) $8.021
Commercial Gas Sales 7.334
Industrial and Utility Gas Sales 6.370 $4.115
Produced Natural Gas $1.884
Marketed Natural Gas 2.184 $1.938
Oil (per barrel) 18.067
Natural Gas Liquids (per gallon) .327
During 1994, a total of 507,126 MMcf of gas was produced and purchased
by the Companies compared with 325,377 MMcf in 1993. The increase reflects
greater marketing activity, including the full-year effect of the LIG
acquisition, and increased production.
GAS PURCHASES. Total purchases in 1994 amounted to 442,605 MMcf, of
which 386,214 MMcf was applicable to marketing operations and 56,391 MMcf
was for system supply, compared with 216,287 MMcf for marketing operations
and 53,568 MMcf for system supply in 1993. 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 the
exploration and production segment in 1994 of 62,507 MMcf increased 8,957
MMcf over the 1993 total of 53,550 MMcf. Other production by transmission
and distribution segments in 1994 was 2,014 MMcf compared with the 1993
total of 1,972 MMcf.
Production of crude oil in 1994 was 1,986,000 barrels, compared with
2,112,000 barrels in 1993.
In 1994, the Company drilled 198 gross wells (144.9 net wells). The
primary focus of drilling activity was in Virginia
for gas and coalbed methane and in the Rockies for oil.
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 all gas production at a profit.
NATURAL GAS AND OIL RESERVES. The Company's estimate of proved
developed and undeveloped gas reserves for the exploration and production
segment comprised 875.0 Bcf as of December 31, 1994. These reserves
included 771.7 Bcf of proved developed reserves. The Company's oil
reserves at December 31, 1994 consisted of 18.3 million barrels of proved
developed and undeveloped reserves; proved developed oil reserves amounted
to 18.1 million barrels. Of the total reserves, 77 percent is in the
Appalachian area, 18 percent in the Rockies and 5 percent in the Gulf. 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 1993-94
heating season were 7.1 Bcf, compared with 11.0 Bcf the previous heating
season. Net withdrawals for storage service customers of 14.1 Bcf were
made during the 1993-94 heating season compared with 12.8 Bcf the previous
heating season.
SUPPLY OUTLOOK. The Company's near-term gas supply for distribution
operations 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.
The natural gas marketing segment has also been in a favorable supply
position and reserves for the exploration and production segment have
continued to increase. However, the rate of purchase of future supplies or
development of reserves 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 natural gas
distribution 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.
The exploration and production and natural gas marketing segments'
revenues are not subject to seasonal variation to the same degree as
natural gas distribution revenues. However, they are subject to price
fluctuations, particularly during the summer months.
(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 marketed natural gas available to existing or potential
customers.
The natural gas distribution segment 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 natural gas transmission
companies.
(c) (1) (xi) Not material.
(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 2,171 regular employees at the end
of 1994.
(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 1995
through 2014. All leases contain adequate renewal options for various
periods. A minor portion of equipment is also leased. With few
exceptions, 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.
NATURAL GAS DISTRIBUTION. Equitable Gas owns and operates natural gas
distribution properties as well as other general property and equipment in
Pennsylvania, West Virginia and Kentucky.
NATURAL GAS TRANSMISSION. 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.
NATURAL GAS MARKETING. This segment owns an intrastate pipeline
system and four hydrocarbon extraction plants in Louisiana. It also has a
high-deliverability gas storage project under development in Louisiana.
EXPLORATION AND PRODUCTION. 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 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 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.
Gas and Oil Production (Exploration and Production):
1994 1993 1992
Gas - MMcf 62,507 53,550 48,243
Oil - Thousands of Barrels 1,986 2,112 2,406
Natural Gas:
Average field sales price of natural gas produced during 1994, 1993
and 1992 was $1.95, $2.24 and $1.88 per Mcf, respectively.
Average production cost (lifting cost) of natural gas during 1994,
1993 and 1992 was $.424, $.458 and $.443 per Mcf, respectively.
Oil:
Average sales price of oil produced during 1994, 1993 and 1992 was
$14.72, $16.18 and $18.07 per barrel, respectively.
Average production cost (lifting cost) of oil during 1994, 1993 and
1992 was $3.73, $4.30 and $3.75 per barrel, respectively.
Gas Oil
Total productive wells at December 31, 1994:
Total gross productive wells 5,542 952
Total net productive wells 4,085 489
Total acreage at December 31, 1994:
Total gross productive acres 713,000
Total net productive acres 588,000
Total gross undeveloped acres 3,087,000
Total net undeveloped acres 2,217,000
Number of net productive and dry exploratory wells and number of net
productive and dry development wells drilled:
1994 1993 1992
Exploratory wells:
Productive 7.0 12.0 11.6
Dry 5.7 6.7 6.3
Development wells:
Productive 126.9 123.4 134.1
Dry 5.3 10.6 12.0
As of December 31, 1994, the Company had 2 gross wells (1.8 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 M 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, 1994.
Item 10. Directors and Executive Officers of the Registrant
(b) Identification of executive officers
Name and Age
Title
Business Experience
Donald I. Moritz (67)
Chairman and Chief Executive Officer
(Retired December 31, 1994)
First elected to present position
December 17, 1993; President and
Chief Executive Officer from
August 1, 1978.
Frederick H. Abrew (57)
President and Chief Operating Officer
(Elected Chief Executive Officer effective January 1, 1995)
First elected to present position
December 17, 1993; Executive Vice
President and Chief Operating
Officer from June 1, 1992;
Executive Vice President from
June 1, 1991; Executive Vice
President - Utility Services from
June 1, 1988.
A. Mark Abramovic (46)
Vice President and Chief Financial Officer
First elected to present position
November 1, 1994; Vice President -
Corporate Development from June 1,
1994; Assistant to the President
from November 1993; Vice President
- - Finance and Chief Financial
Officer of Connecticut Natural Gas
Corporation, Hartford, CT, from
January 1991; Vice President -
Finance of the Peoples Natural Gas
Company, Pittsburgh, PA, from
September 1986.
Jeremiah J. Ayres (62)
Senior Vice President - Environment and Technology
(Retired July 1, 1994)
First elected to present position
February 1, 1991; Vice President -
Corporate Services from March 26,
1987.
Robert E. Daley (55)
Vice President and Treasurer
First elected to present position May 22, 1986.
Harry E. Gardner, Jr. (57)
Vice President - Energy Resources
(Retired December 31, 1994)
First elected to present position
June 1, 1992; President - Equitable
Resources Energy Company since
January 1, 1991; President
Equitable Resources Exploration
Division from July 1, 1987.
Joseph L. Giebel (64)
Vice President - Accounting and Administration
First elected to present position
February 1, 1991; Vice President -
Accounting from May 1, 1981.
John C. Gongas, Jr. (50)
Vice President - Utility Group
First elected to present position
January 1, 1994; Vice President -
Utility Services from June 1, 1992;
President of Kentucky West Virginia
Gas Company since April 20, 1992;
President of Equitrans, Inc. from
February 26, 1988.
Augustine A. Mazzei, Jr. (58)
Senior Vice President and General Counsel
First elected to present position
June 1, 1988.
Audrey C. Moeller (59)
Vice President and Corporate Secretary
First elected to present position
May 22, 1986.
Richard Riazzi (40)
Vice President - Energy Group
First elected to present position
January 1, 1994; Vice President -
Corporate Development from
August 1, 1991; Director - Special
Projects from October 1, 1990;
President - Equitable Resources
Marketing Company from February 27,
1989.
Gregory R. Spencer (46)
Vice President - Human Resources
First elected to present position
October 10, 1994; Vice President of
Human Resources Administration of
AMSCO International, Inc.,
Pittsburgh, PA, from May 1993
(integrated manufacturer of
sterilization and decontamination
equipment for health care and
scientific customers); General
Manager - Human Resources of U.S.
Steel Group of USX Corporation,
Pittsburgh, PA, from October 1991;
Director - Personnel, U.S. Steel
Group of USX Corporation,
Pittsburgh, PA, from July 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 27,
1994.
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:
1994 1993
High Low Dividend High Low Dividend
1st Quarter 38 3/4 34 $.285 41 1/2 33 $.270
2nd Quarter 37 32 1/4 .285 * 40 3/4 36 7/8 .270 *
3rd Quarter 35 5/8 29 .285 44 1/4 35 1/4 .270
4th Quarter 31 1/8 25 1/2 .295 42 3/4 35 1/4 .285
* Actually declared near the end of the preceding quarter.
(b) As of December 31, 1994, there were 8,686 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, $408,797,000 of the Company's consolidated retained earnings at
December 31, 1994, 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
1994 1993 1992 1991 1990
(Thousands Except Per Share Amounts)
Operating
revenues $1,397,280 $1,094,794 $ 812,374 $ 679,631 $ 659,216
Net income $60,729 $73,455 $60,026 $64,168 $58,949
Earnings per
share of
common stock $1.76 $2.27 $1.92 $2.05 $1.88
Total assets $2,019,122 $1,946,907 $1,468,424 $1,440,593 $1,229,154
Long-term debt $398,282 $378,845 $346,693 $346,818 $254,725
Cash dividends
paid per share of
common stock $1.15 $1.10 $1.04 $1.00 $.91
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
OVERVIEW
Equitable's consolidated net income for 1994 was
$60.7 million or $1.76 per
share, compared with $73.5 million or $2.27 per share for 1993,
and $60.0 million or $1.92 per share for 1992.
While natural gas production reached a record high for 1994, an increase of
17 percent over 1993, income was adversely impacted by
a 13 percent decline in average wellhead
prices for natural gas, increased operating and interest expense, and lower
margins from the Company's Louisiana Intrastate Gas subsidiary.
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 natural
gas distribution and transmission 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.
RESULTS OF OPERATIONS
Beginning in 1994, the Company expanded the reporting of operations to
comprise four segments--Exploration and Production, Natural Gas Marketing,
Natural Gas Distribution and Natural Gas Transmission. This discussion
supplements the detailed financial information by business segment presented in
Note L to the consolidated financial statements.
EXPLORATION AND PRODUCTION
Operating revenues, which are derived primarily from the sale of produced
natural gas, oil and natural gas liquids and
from contract drilling, were $195.8 million in 1994 compared
with $202.4 million in 1993 and $191.5 million in 1992. The decrease in
revenues for 1994 compared to 1993 is due primarily to lower wellhead prices
for natural gas and oil, and lower selling prices and production of
natural gas liquids which were partially offset by increased gas production.
The increase in revenues for 1993 compared to 1992 is due primarily to
increases in average wellhead prices and production of natural gas.
Exploration and Production 1994 1993 1992
Operating Revenues (thousands):
Natural Gas . . . . . . . . . $121,810 $119,746 $ 90,886
Oil . . . . . . . . . . . 29,239 34,176 43,469
Natural Gas Liquids . . . . . 15,244 19,545 21,256
Contract Drilling . . . . . . 15,427 14,611 19,924
Direct Billing Settlements. . 7,815 7,815 7,815
Other . 6,260 6,529 8,128
------- ------- -------
Total Revenues . . . . $195,795 $202,422 $191,478
======= ======= =======
Sales Quantities:
Natural Gas (MMcf). . . . . . 62,507 53,550 48,243
Oil (MBls). . . . . . . . . . 1,986 2,112 2,406
Natural Gas Liquids (thousands
of gallons) . . . . . . . . 51,032 60,973 64,938
Gas purchased amounted to $10.6 million in 1994 compared with $17.0 million
in 1993 and $15.3 million in 1992. The decrease in gas purchased for 1994
compared to 1993 is due to the lower requirements attributed to decreased
production of natural gas liquids. The increase in gas purchased for 1993
compared to 1992 is due to higher costs for purchased gas.
Other operating expenses were $154.4 million in 1994, $142.9 million in
1993, and $139.8 million in 1992. Increases for the respective years are
attributed to increased production expenses and depreciation and depletion
related to the higher level of natural gas production.
Operating income was $30.8 million in 1994, $42.5 million in 1993, and
$36.4 million in 1992. The decrease in operating income for 1994 compared to
1993 reflects lower wellhead prices for natural gas and oil, and lower selling
prices and production of natural gas liquids which were partially offset by
increased gas production. The increase in operating income for
1993 compared to 1992 reflects primarily the increase in average
wellhead prices and production of natural gas.
Average wellhead natural gas prices for 1994 decreased 13 percent from the
1993 level, which was the highest level that had been experienced since 1988.
Thus far in 1995, the wellhead prices have shown
little sign of improving. Prices for oil and natural gas liquids
continued the decline that began as far back as 1991.
Natural gas production continued to increase in 1994
reflecting the on-going development of Appalachian properties,
which are the foundation of the segment's
activities, as well as expansion in the off-shore Gulf Coast area.
The 1995 capital expenditure program of $71.0 million for exploration and
production includes $15.4 million for development of Appalachian
holdings, $18.3 million for the Rocky Mountain area,
$32.3 million for off-shore drilling in the
Gulf of Mexico, and $2.7 million for exploration in South America.
Market and price trends will continue to be the
principal factors for the economic
justification of drilling investments under the 1995 program.
NATURAL GAS MARKETING
Operating revenues, which are derived primarily from the marketing of
natural gas, sale of produced natural gas liquids, and
intrastate transportation of natural gas in Louisiana,
were $890.8 million in 1994 compared with $599.6
million in 1993 and $314.6 million in 1992.
The increase in revenues between the
years is attributed primarily to the acquisition of Louisiana Intrastate Gas
Company (LIG) on June 30, 1993, as more fully described in Note M to the
consolidated financial statements.
Natural Gas Marketing 1994 1993 1992
Operating Revenues (thousands):
Natural Gas Marketing . . . . $830,082 $565,605 $ 314,276
Natural Gas Liquids . . . . . 51,113 27,576 --
Transportation. . . . . . . . 9,266 6,247 --
Other . 317 196 350
------- ------- -------
Total Revenues . . . . $890,778 $599,624 $314,626
======= ======= =======
Sales Quantities:
Marketed Natural Gas (MMcf) . 429,651 253,516 162,135
Natural Gas Liquids (thousands
of gallons) . . . . . . . . 194,493 101,218 --
Gas purchased amounted to $857.4 million in 1994 compared with $575.7
million in 1993 and $305.9 million in 1992. The increased cost between the
years reflects the increase in volume of marketed natural gas and requirements
for the higher production levels of natural gas liquids.
Other operating expenses were $29.3 million in 1994, $12.2 million in 1993,
and $3.8 million in 1992. Increases for the respective years reflect the
acquisition of LIG.
Operating income was $4.1 million in 1994, $11.7 million in 1993, and $4.9
million in 1992. The decrease in operating income for 1994 compared to 1993
reflects lower prices for natural gas liquids. The increase in operating
income for 1993 compared to 1992 reflects primarily the acquisition of LIG.
Gas marketing activities continued to expand during 1994. However, the
impact of lower energy prices overshadowed the nearly
seventy percent increase in marketed volumes.
LIG, which contributed to the increase in marketed services,
fell below profit expectations because of the substantial decline in liquids
processing margins. This is attributed
to the competitive pressure of lower oil
prices during most of the year. Nevertheless, the acquisition of LIG has
positioned the Company's marketing activities in the Gulf Coast area where it
also has expanding exploration and production activities. The Company is
developing gas storage and interchange facilities which will connect with the
Henry Hub as well as LIG's system of pipelines, gas processing facilities, and
multiple interconnections with major pipelines. This integration and expansion
of services is the foundation for developing a Gulf Coast market center.
The 1995 capital expenditure program of $25.2 million for marketing
operations includes $19.0 million for development of the gas
storage system, $5.0 million for improvement of LIG's
pipeline and gathering system, and $1.2 million
for development of information systems to
support the expanded services expected to be offered.
NATURAL GAS DISTRIBUTION
Operating revenues, which are derived from the sale and transportation of
natural gas primarily to retail customers at state regulated rates,
were $390.5 million in 1994 compared with $335.1 million in 1993
and $328.0 million in 1992.
The increase in revenues for 1994 compared to 1993 is due primarily to higher
retail rates to pass through increased purchased gas costs to customers,
increased sales to utilities, and increased commercial and industrial sales
reflecting some transportation customers switching service. The increase in
revenues for 1993 compared to 1992 is due to the full-year impact of a retail
rate increase for Pennsylvania customers, which went into ,
effect in July of 1992 offset by lower retail rates
to pass through decreased purchased gas costs to
customers.
Natural Gas Distribution 1994 1993 1992
Operating Revenues (thousands):
Residential Gas Sales . . . . $265,356 $247,238 $241,331
Commercial Gas Sales. . . . . 66,956 59,057 59,386
Industrial and Utility Gas Sales . 31,853 8,017 4,593
Transportation Service. . . . 21,750 16,526 17,967
Other . 4,560 4,311 4,745
------- ------- -------
Total Revenues. . . . . . . $390,475 $335,149 $328,022
======= ======= =======
Sales Quantities (MMcf):
Residential Gas Sales . . . . 29,570 29,980 30,089
Commercial Gas Sales. . . . 9,681 8,235 8,097
Industrial and Utility Gas Sales 12,855 1,767 721
Transportation Deliveries . . 8,611 10,986 13,080
Heating Degree Days
(Normal - 5,968). . . . . . 5,607 5,628 5,629
Gas purchased amounted to $232.9 million in 1994, $182.8 million in 1993,
and $179.4 million in 1992. The increase in gas costs for
1994 compared to 1993
reflects the pass-through of higher costs in rates to
retail customers and the increase in sales
to commercial, industrial, and utility customers. The increase
in gas costs for 1993 compared to 1992
reflects increased sales to commercial, industrial, and utility customers
partially offset by the pass-through of lower
costs in rates to retail customers.
Other operating expenses amounted to $114.4 million in 1994, $106.6
million in 1993, and $97.2 million in 1992. The increase between the years is
due principally to increased labor, sales and marketing, distribution, and
uncollectible account expenses.
Operating income was $43.2 million in 1994 compared with $45.7 million in
1993 and $51.4 million in 1992. The decrease in operating income between the
years is due primarily to increased operating expenses, which more than offset
the higher margins being realized.
The operating results of the distribution operations continue to be
impacted by the effects of weather on gas sales, primarily to residential
customers. However, increased sales to utility customers and the continuing
expansion of new gas-using technologies such as co-generation, natural gas
vehicles, and natural gas-fired cooling have served to
retain system throughput. In addition, new services
for customers, such as energy management, have helped
to offset the effects of weather that continues to be warmer than normal.
The 1995 capital expenditure program of $25.1 million for distribution
operations includes $17.1 million for the distribution system, $5.7 million for
development of information systems and $2.3 million for other items.
NATURAL GAS TRANSMISSION
Operating revenues, which are derived from the interstate transportation,
storage and sale of natural gas subject to federal regulation,
and the marketing of natural gas, were $116.8
million in 1994 compared with $188.9 million in 1993 and $203.4 million
in 1992. The decrease in revenues between the years reflects
the effects of FERC Order 636 restructuring which took
effect in the middle of 1993.
Natural Gas Transmission 1994 1993 1992
Operating Revenues (thousands):
Industrial and Utility
Gas Sales . . . $ 2,309 $114,867 $155,271
Marketed Gas Sales. . . . . . 21,244 10,200 --
Transportation Service. . . . 69,958 47,534 34,779
Storage Service . . . . . . . 16,993 10,014 6,693
Other . 6,265 6,267 6,658
------- ------- -------
Total Revenues. . . . . . . $116,769 $188,882 $203,401
======= ======= =======
Sales Quantities (MMcf):
Industrial and Utility
Gas Sales . . . 388 26,345 36,697
Marketed Gas Sales. . . . . . 9,131 4,052 --
Transportation Deliveries . . 123,472 88,550 79,015
Gas purchased amounted to $18.2 million in 1994, $95.9 million in 1993,
and $127.4 million in 1992. The decrease
in gas costs between the years reflects the elimination
of pipeline gas sales pursuant to FERC Order 636 restructuring.
Other operating expenses amounted to $66.4 million in 1994, $62.3 million
in 1993, and $54.0 million in 1992. The increase in expenses between the years
is due primarily to provisions for possible refunds to customers.
Operating income was $32.2 million in 1994 compared with $30.7 million in
1993 and $22.0 million in 1992. The increase in operating income between the
years is due primarily to the restructuring of tariff rates pursuant to FERC
Order 636 whereby all fixed costs are now recovered in the demand portion of
pipeline rates.
The 1995 capital expenditure program of $19.6 million for transmission
operations includes $12.3 million for maintaining and
expanding the transmission system, $4.0 million for expansion
of gas storage facilities, and $3.3 million for other items.
CAPITAL RESOURCES AND LIQUIDITY
Operating Activities
Cash required for operations is impacted primarily by the seasonal nature
of the Company's distribution 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. In addition, short-
term loans are 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 its distribution and transmission
plant and continuing development and expansion of its resource production
activities. Such expenditures during 1994 were $146.2 million. A total of
$140.9 million has been authorized for the 1995 capital expenditure program.
Short-term loans are also used as interim financing for a portion of
capital expenditures. The Company expects to finance its 1995 capital
expenditures with cash generated from operations and temporarily
with short-term loans.
Capital expenditures, including acquisitions, totaled about $922 million
during the five-year period ended December 31, 1994, of which 45 percent was
financed from operations.
Financing Activities
The Company 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 2.99 percent to 6.80 percent during 1994. At
December 31, 1994, $256.0 million of commercial paper and $13.3 million of bank
loans were outstanding at an average interest rate of 5.94 percent.
In January 1995, the Company established
a five-year revolving Credit Agreement with a group
of banks providing $500 million
of available credit. The agreement requires a
facility fee of one-tenth of one percent. Adequate credit is 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.
During the first quarter of 1994, the Company issued the remaining $43.5
million of Medium-Term Notes--Series B which were available under a shelf
registration filed in March 1992 covering $100 million of medium-term notes.
The Company filed a new shelf registration effective June 9, 1994, for the
issuance of $100 million of Medium-Term Notes--Series C to be used to retire
short-term loans. No Series C Notes have been issued.
Federal Income Tax Provisions
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 1994. 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, 1994, the Company has available $82.9 million of AMT credit
carryforwards. The impact of AMT on
future cash flow will depend on the level of taxable income.
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
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 as the related reserves
are depleted. The credits recorded in 1994, 1993,
and 1992 reduced the Company's federal income
tax provisions by $16.4 million, $20.6 million, and $14.1
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 $6.5 million is accrued at December 31,
1994. The portion of amounts expensed through
1994 that have been deferred, pending recovery in
future rates, and included in regulatory assets amounts to
$3.5 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 costs
generally do not affect results of operations due to regulatory procedures for
purchased gas cost recovery in rates. The increase in refunds due customers
reflects provisions for refund of a portion of Equitrans' current rates
that are in effect subject to approval by the FERC.
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 24
Statements of Consolidated Income
for each of the three years in
the period ended December 31, 1994 25
Consolidated Balance Sheets
December 31, 1994 and 1993 26 & 27
Statements of Consolidated Cash Flows
for each of the three years in the
period ended December 31, 1994 28
Statements of Common Stockholders'
Equity for each of the three
years in the period ended
December 31, 1994 29
Long-term Debt, December 31,
1994 and 1993 30
Notes to Consolidated Financial
Statements 31 - 48
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, 1994 and 1993, 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, 1994. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule 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, 1994 and 1993,
and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994 in conformity
with generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
As described in Note E to the consolidated financial statements, the
Company changed its method of accounting for postretirement benefits in
1993.
s/ Ernst & Young LLP
Ernst & Young LLP
Pittsburgh, Pennsylvania
February 13, 1995
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
(Thousands Except Per Share Amounts)
Operating Revenues $1,397,280 $1,094,794 $812,374
Cost of Gas Purchased 926,905 644,157 407,055
--------- --------- -------
Net operating revenues 470,375 450,637 405,319
--------- --------- -------
Operating Expenses:
Operation 192,799 174,420 161,972
Maintenance 31,737 29,024 26,327
Depreciation and depletion 93,347 76,894 65,940
Taxes other than income 42,244 39,802 36,654
--------- --------- -------
Total operating expenses 360,127 320,140 290,893
--------- --------- -------
Operating Income 110,248 130,497 114,426
Other Income 3,163 1,706 1,781
Interest Charges 43,905 38,728 37,411
--------- --------- -------
Income Before Income Taxes 69,506 93,475 78,796
Income Taxes 8,777 20,020 18,770
--------- --------- -------
Net Income $ 60,729 $ 73,455 $ 60,026
========= ========= =======
Average Common
Shares Outstanding 34,509 32,359 31,342
Earnings Per Share
of Common Stock $1.76 $2.27 $1.92
See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1994 AND 1993
ASSETS
1994 1993
(Thousands)
Property, Plant and Equipment:
Exploration and production
(successful efforts method) $ 983,328 $ 905,856
Natural gas marketing 309,579 297,743
Natural gas distribution 552,789 523,497
Natural gas transmission 387,921 379,741
--------- ---------
Total 2,233,617 2,106,837
Less accumulated depreciation
and depletion 637,951 558,413
--------- ---------
Net property, plant and
equipment 1,595,666 1,548,424
--------- ---------
Current Assets:
Cash and cash equivalents 23,415 15,037
Accounts receivable (less
accumulated provision for
doubtful accounts: 1994,
$10,890;
1993, $10,106) 172,178 171,626
Unbilled revenues 25,794 27,853
Gas stored underground
- current inventory 15,101 18,059
Material and supplies 12,876 12,261
Deferred purchased gas cost 24,890 17,148
Prepaid expenses and other 33,569 23,977
--------- ---------
Total current assets 307,823 285,961
--------- ---------
Other Assets:
Regulatory assets 88,387 87,024
Other 27,246 25,498
--------- ---------
Total other assets 115,633 112,522
--------- ---------
Total $2,019,122 $1,946,907
========= =========
See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1994 AND 1993
CAPITALIZATION AND LIABILITIES
1994 1993
(Thousands)
Capitalization:
Common stockholders' equity $ 750,002 $ 728,030
Long-term debt 398,282 378,845
--------- ---------
Total capitalization 1,148,284 1,106,875
--------- ---------
Current Liabilities:
Long-term debt payable
within one year 24,500 1,971
Short-term loans 269,300 253,900
Accounts payable 123,394 143,808
Accrued taxes 19,588 15,358
Accrued interest 13,032 12,338
Refunds due customers 22,255 14,206
Customer credit balances 10,427 7,578
Other 16,399 14,794
--------- ---------
Total current liabilities 498,895 463,953
--------- ---------
Deferred and Other Credits:
Deferred income taxes 326,597 331,140
Deferred investment tax credits 22,082 23,178
Other 23,264 21,761
--------- ---------
Total deferred and
other credits 371,943 376,079
--------- ---------
Commitments and Contingencies - -
--------- ---------
Total $2,019,122 $1,946,907
========= =========
See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
(Thousands)
Cash Flows from Operating Activities:
Net income $ 60,729 $ 73,455 $ 60,026
------- ------- -------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and depletion 93,347 76,894 65,940
Deferred income taxes (5,059) 756 (2,015)
Other - net 1,566 1,319 1,435
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues 723 (22,352) (8,035)
Gas stored underground 2,958 (5,076) 3,990
Material and supplies (615) (709) (724)
Deferred purchased gas cost (7,742) (14,024) 4,915
Regulatory assets (1,363) (18,657) (2,870)
Accounts payable (20,414) 18,747 2,821
Accrued taxes 4,230 1,024 1,018
Refunds due customers 8,049 2,537 4,050
Other - net (1,274) (4,588) 3,965
------- ------- -------
Total adjustments 74,406 35,871 74,490
------- ------- -------
Net cash provided by
operating activities 135,135 109,326 134,516
------- ------- -------
Cash Flows from Investing Activities:
Capital expenditures (146,174) (339,411) (99,589)
Proceeds from sale of property 1,195 1,270 6,872
------- ------- -------
Net cash used in
investing activities (144,979) (338,141) (92,717)
------- ------- -------
Cash Flows from Financing Activities:
Issuance of common stock 1,791 112,412 1,427
Purchase of treasury stock (395) (28) (226)
Dividends paid (39,686) (35,279) (32,595)
Proceeds from issuance of long-term debt 43,083 31,702 24,359
Repayments and retirements of long-term debt (1,971) (16,445) (15,995)
Increase (decrease) in short-term loans 15,400 139,900 (15,500)
------ ------- -------
Net cash provided (used)
by financing activities 18,222 232,262 (38,530)
------- ------- -------
Net Increase in Cash and Cash Equivalents 8,378 3,447 3,269
Cash and Cash Equivalents at Beginning of Year 15,037 11,590 8,321
------- ------- -------
Cash and Cash Equivalents at End of Year $ 23,415 $ 15,037 $ 11,590
======= ======= =======
Cash Paid During the Year for:
Interest (net of amount capitalized) $ 40,105 $ 34,592 $ 31,304
Income taxes $ 13,098 $ 27,547 $ 17,587
See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Common Stock (a) Foreign Common
Shares No Retained Currency Stockholders'
Outstanding Par Value Earnings Translation Equity
(Thousands)
Balance, January 1, 1992 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 percent
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 (581)
Stock issued:
New stock issuance 3,000 111,570
Conversion of 9 1/2 percent
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) 34,465 208,178 520,433 (581) 728,030
Net income for the year 1994 60,729
Dividends ($1.15 per share) (39,686)
Foreign currency translation (923)
Stock issued:
Conversion of 9 1/2 percent
debentures 31 345
Restricted stock option plan 8 313
Dividend reinvestment plan 47 1,504
Treasury stock (10) (310)
------ ------ ------- ------
Balance, December 31, 1994 (b)(c)(d) 34,541 $210,030 $541,476 $(1,504) $750,002
====== ======= ======= ======
(a) Shares authorized: Common - 80,000,000 shares,
Preferred - 3,000,000 shares.
(b) Net of treasury stock: 1994 - 632,000 shares ($14,933,000);
1993 - 622,000 shares ($14,623,000); 1992 - 621,000 shares ($14,595,000).
(c) A total of 2,870,000 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, the long-term incentive plan, the non-
employee directors' stock incentive plan, and
for issuance under the company's dividend reinvestment and
stock purchase plan.
(d) Retained earnings of $408,797,000 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 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
LONG-TERM DEBT
DECEMBER 31, 1994 AND 1993
Annual Debt Maturities After
Maturities One Year
1994 1993 1994 1993
(Thousands)
8 1/4 percent Debentures, $ - $ - $ 75,000 $ 75,000
due July 1, 1996 (a)
7 1/2 percent Debentures, due July 1, 1999
($75,000 principal amount, net of
unamortized original issue discount)(a) - - 70,466 69,684
9 1/2 percent Convertible
subordinated debentures,
due January 15, 2006 - - 2,316 2,661
9.9 percent Debentures, due - - 75,000 75,000
April 15, 2013 (b)
Medium-term notes:
7.2 to 9.0 percent Series A,
due 1998 thru 2021 - - 100,000 100,000
5.1 to 7.6 percent Series B,
due 1995 thru 2023 24,500 - 75,500 56,500
Other - 1,971 - -
------ ----- ------- -------
Total $24,500 $1,971 $398,282 $378,845
====== ===== ======= =======
(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 31 to 48, inclusive
EQUITABLE RESOURCES, INC.
Notes to Consolidated Financial Statements
December 31, 1994
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 percent
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 $.9 million in 1994, $1.0 million in 1993 and $1.3 million in
1992. 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 $2.1 million in 1994, $1.8 million in 1993
and $1.3 million in 1992.
(4) INVENTORIES: Inventories are stated at cost which is below
market. Gas stored underground--current inventory is stated at cost under
the average cost method. 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 Companies establish 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.
(6) DEFERRED PURCHASED GAS COST: Where permitted by regulatory
authority under purchased gas adjustment clauses or similar tariff
provisions, the Company defers the difference between purchased gas cost,
less refunds, and the billing of such cost and amortizes 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) DERIVATIVE FINANCIAL INSTRUMENTS: The Company uses exchange-
traded natural gas and crude oil futures contracts to hedge exposures to
energy price changes. To qualify for hedge accounting, the Company must be
exposed to energy price risk and the futures contracts must be designated
and effective as hedges. Realized gains and losses on futures contracts
which qualify as hedges of firm commitments or anticipated transactions are
deferred and recognized in income when the hedged transactions occur. The
Company also trades natural gas futures. Realized and unrealized gains and
losses on such transactions are recorded in other income in the period in
which the changes occur. Margin requirements on futures contracts are
recorded in other current assets on the balance sheet.
(9) CASH FLOWS: The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash
equivalents.
(10) RECLASSIFICATION: Certain amounts contained in prior year
comparative information have been reclassified to conform with the 1994
presentation.
B. Direct Billing Settlements
Kentucky West Virginia Gas Company received FERC approval of settlement
agreements with all customers for the direct billing to recover the higher
Natural Gas Policy Act (NGPA) prices, which the FERC had denied on natural
gas produced from exploration and production properties between 1978 and
1983. The portion of the settlement with the Equitable Gas Division has been
subject to Pennsylvania Public Utility Commission (PUC) review. The PUC
approved the recovery of $7.8 million relating to the settlement in each of
the years 1992 to 1994, which increased net income reported for the third
quarter of each year by $4.7 million. Approximately $42 million from the
settlement remains to be recovered in future gas cost filings with the PUC
over the next six years.
The settlement with Columbia Gas Transmission Company for the
recovery of $19 million 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 following table summarizes the source and tax effects of temporary
differences between financial reporting and tax bases of assets and
liabilities:
December 31,
1994 1993
(Thousands)
Deferred tax liabilities (assets):
Exploration and development costs
expensed for income tax reporting . . . . $141,479 $138,089
Tax depreciation in excess of
book depreciation . . . . . . . 255,683 250,032
Regulatory temporary differences . . 37,319 36,841
Deferred purchased gas cost. . . . . 6,397 8,413
Alternative minimum tax. . . . . . . (82,925) (69,333)
Investment tax credit. . . . . . . . (9,306) (10,340)
Other. . . . . . . . . . . . . . . . (17,606) (21,829)
------- -------
Total (including amounts classified as
current liabilities of $4,444 for 1994
and $733 for 1993) . . $331,041 $331,873
======= =======
As of December 31, 1994 and 1993, $76.2 million and $76.4 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,
1994 1993 1992
(Thousands)
Current:
Federal. . . . . . . . . . $11,196 $15,577 $13,540
State. . . . . . . . . . . 2,640 3,687 7,245
Deferred:
Federal. . . . . . . . . . (6,848) (2,758) (4,547)
State. . . . . . . . . . . 1,789 3,514 2,532
----- ------ ------
Total . . . . . . . . $ 8,777 $20,020 $18,770
====== ====== ======
Provisions for income taxes are less than amounts computed at the
federal statutory rate of 35 percent for 1994 and 1993,
and 34 percent for 1992 on pretax
income. The reasons for the difference are summarized as follows:
Years Ended December 31,
1994 1993 1992
(Thousands)
Tax at statutory rate . $ 24,327 $ 32,716 $ 26,791
State income taxes . . . 3,069 4,332 6,453
Increase in federal
income tax rate. . . . - 5,070 -
Nonconventional fuels
tax credit . . . . . . (16,442) (20,600) (14,051)
Other . (2,177) (1,498) (423)
------- ------- -------
Income tax expense . . $ 8,777 $ 20,020 $ 18,770
======= ======= =======
Effective tax rate . . . 12.6 percent 21.4 percent 23.8 percent
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 percent. 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 $82.9 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
$14.9 million which begin to expire in 2006. The net operating loss
carryforwards apply to Louisiana Intrastate Gas.
Amortization of deferred investment tax credits amounted to $1.1
million for 1994, $1.4 million for 1993 and $1.1 million for 1992.
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.
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets:
December 31,
1994 1993
(Thousands)
Actuarial present value of benefit obligations:
Vested benefit obligation $120,763 $132,402
======= =======
Accumulated benefit obligation $123,877 $135,809
======= =======
Market value of plan assets $143,121 $159,433
Projected benefit obligation 134,111 148,265
------- -------
Excess of plan assets over projected
benefit obligation 9,010 11,168
Unrecognized net asset (2,905) (3,237)
Unrecognized net gain (15,606) (16,732)
Unrecognized prior service cost 9,512 10,403
------- -------
Prepaid pension cost recognized in
the consolidated balance sheets $ 11 $ 1,602
======= =======
At year-end the discount rate used in determining the actuarial present
value of benefit obligations was 8 1/4 percent for 1994, 7 1/4 percent for
1993 and 8 1/4 percent for 1992. The assumed rate of increase
in compensation levels was 4 1/2 percent for 1994 and 1993 and
5 percent for 1992.
The Companies' pension cost, using a 9 percent average rate
of return on plan assets, comprised the following:
Years Ended December 31,
1994 1993 1992
(Thousands)
Service cost benefits earned
during the period. $ 3,916 $ 2,806 $ 2,345
Interest cost on projected
benefit obligation 10,752 10,472 9,917
Actual loss (return) on assets. . . . . 2,757 (17,224) (18,214)
Net amortization and deferral. (14,680) 5,486 7,069
------ ------ ------
Net periodic pension cost . . $ 2,745 $ 1,540 $ 1,117
====== ====== ======
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. The Company's transition
obligation is being amortized over 20 years. In determining the accumulated
postretirement benefit obligation at December 31, 1994, the Company used a
beginning inflation factor of 10 1/2 percent decreasing
gradually to 4 3/4 percent after 15 years and
a discount rate of 8 1/4 percent. At December 31, 1993, the beginning
inflation factor was 11 percent decreasing
gradually to 4 3/4 percent after 16 years and the discount rate was
7 1/4 percent. The following summarizes the status of the
Company's accrued postretirement benefit costs (OPEBS):
December 31,
1994 1993
(Thousands)
Accumulated postretirement
benefit obligation:
Retired employees. . . . . . . . . $ 21,269 $ 23,078
Active employees:
Fully eligible . . . . . . . . . 9,158 8,942
Other. . . . . . . . . . . . . . 13,459 16,741
------- -------
Total obligation . . . . . . . 43,886 48,761
Unrecognized net gain . . . . . . . 5,160 40
Unrecognized transition obligation. (41,501) (43,806)
------- -------
Accrued postretirement
benefit cost . $ 7,545 $ 4,995
======= =======
The net periodic cost for postretirement health care and life insurance
benefits includes the following:
Years Ended December 31,
1994 1993
(Thousands)
Service cost. . . . . . . . . . . . $1,049 $1,065
Interest cost . . . . . . . . . . . 3,423 3,936
Amortization of transition obligation. . . 2,305 2,306
----- -----
Periodic cost. . . . . . . . . . . $6,777 $7,307
===== =====
As of December 31, 1994 and 1993, $3.5 million and $2.9 million,
respectively, of the accrued OPEBS related to rate regulated operations have
been deferred as regulatory assets. Rate filings have been undertaken to
seek recovery of accrued costs 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 7 percent
and would increase the periodic cost by 8 percent.
The cost of OPEBS for 1992 was recognized as paid and amounted to $2.9
million.
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
M.
(2) Key Employee Restricted Stock Option Plan
The Equitable Resources, Inc., Key Employee Restricted Stock Option and
Stock Appreciation Rights Incentive Compensation Plan is nonqualified and
provided for the granting of restricted stock awards or options to purchase
common stock of the Company at prices ranging
from 75 percent to 100 percent of market
value on the date of grant. 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.
The following schedule summarizes the stock option activity:
Years Ended December 31,
1994 1993 1992
Options outstanding January 1 . . 253,068 139,725 228,787
Granted . . . . . . . . . . . . . - 148,543 -
Exercised . . . . . . . . . . . . (7,650) (33,325) (89,062)
Canceled, forfeited, surrendered
or expired . . . . . . . . . . . (3,600) (1,875) -
------- ------- -------
Options outstanding December 31 . 241,818 253,068 139,725
======= ======= =======
Average price of options
exercised during the year . . . $22.48 $18.97 $17.07
At December 31:
Prices of options outstanding . $18.81 $17.50 $15.20
to to to
$36.50 $36.50 $20.13
Average option price . . . . . . $29.82 $29.69 $19.76
Shares reserved for issuance . . 663,699 671,349 705,209
No future grants may be made under the Plan which was replaced by the
Long-Term Incentive Plan effective May 27, 1994 as described below.
(3) Long-Term Incentive Plan
On May 27, 1994, shareholders approved the Equitable Resources, Inc.
Long-Term Incentive Plan which provides for the granting of shares of common
stock to officers and key employees of the Company. These grants may be
made in the form of stock options, restricted stock, stock appreciation
rights and other types of stock-based or performance-based awards as
determined by the Compensation Committee of the Board of Directors at the
time of each grant. Stock awarded under the Plan, or purchased through the
exercise of options, and the value of stock appreciation units, are
restricted and subject to forfeiture should an optionee terminate employment
prior to specified vesting dates. The maximum number of shares which could
have been granted under the Plan during 1994 was 763,500 shares. In each
subsequent year, an additional number of shares equal to 1 percent of the total
outstanding shares as of the preceding December 31 will be available for
grant. In no case may the number of shares granted under the Plan exceed
1,725,500 shares. No awards may be made under the Plan after May 27, 1999.
In May 1994, 363,400 stock options were granted to purchase common stock at
$33.81 per share, which was the mean of the high and the low trading prices
of the common stock on the date of grant. These options expire five years
from the date of grant. At December 31, 1994, 1,725,500 shares of common
stock were reserved for issuance under the Plan.
(4) Non-Employee Directors' Stock Incentive Plan
On May 27, 1994, shareholders approved the Equitable Resources, Inc.
Non-Employee Directors' Stock Incentive Plan which provides for the granting
of up to 80,000 shares of common stock in the form of stock option grants
and restricted stock awards to non-employee directors of the Company. Each
Director received 450 shares of restricted stock on February 3, 1994. On
June 1, 1994, each director was granted an option for 500 shares of common
stock at $34.625 per share. On the first business day of June,
in each year from 1995 through
1998, each Director will be granted an option for 500 additional shares of
common stock. The exercise price for each share is
100 percent of the mean of the high and the
low trading prices of the common stock
on the date of grant. Each option is exercisable upon the earlier of three
years from the date of grant or a Director's retirement, disability or
death. No option may be exercised more than five years after date of grant.
At December 31, 1994, 76,400 shares of common stock were reserved for
issuance under the Plan.
(5) Dividend Reinvestment and Stock Purchase Plan
Pursuant to this plan, stockholders may reinvest dividends and make
limited additional cash investments to purchase shares of common stock.
Shares issued through the Plan may be acquired on the open market or by
issuance of previously unissued shares. At December 31, 1994, 194,183
shares of common stock were reserved for issuance under the Plan.
G. Short-Term Loans
Maximum lines of credit available to the Company were $325 million
during 1994, $360 million during 1993 and $140 million during 1992. The
Company is not required to maintain compensating bank balances. Commitment
fees averaging one-tenth of one percent were paid to maintain credit
availability. In January 1995, the Company established a five-year
revolving Credit Agreement with a group of banks providing $500 million of
available credit. The agreement requires a facility fee of one-tenth of one
percent.
At December 31, 1994, short-term loans consisted of $256.0 million of
commercial paper and $13.3 million of bank loans at a weighted average
annual interest rate of 5.94 percent; and at December 31, 1993, $189.9 million
and $64.0 million, respectively, at a weighted average annual interest rate of
3.30 percent. The maximum amount of outstanding short-term loans was $269.3
million in 1994, $339.0 million in 1993 and $130.5 million in 1992. The
average daily total of short-term loans outstanding was approximately $204.6
million during 1994, $174.9 million during 1993 and $107.4 million during
1992; weighted average annual interest rates applicable thereto were
4.4 percent in 1994, 3.3 percent in 1993 and 3.8 percent in 1992.
H. Long-Term Debt
The Company filed a shelf registration with the Securities and Exchange
Commission effective June 9, 1994 to issue $100 million of Medium-Term
Notes--Series C to be used to retire short-term loans. No Series C Notes
have been issued.
During the first quarter of 1994, the Company issued the remaining
$43.5 million of Medium Term Notes--Series B under a shelf registration
filed with the Securities and Exchange Commission in March 1992. The Series
B Notes have maturity dates ranging from three to thirty years from date of
issuance and a weighted average interest rate of 6.60 percent.
The 9 1/2 percent Convertible Subordinated Debentures are convertible at any
time into common stock at a conversion price of $11.06 per share. During
1994, 1993 and 1992, $345,000, $564,000 and $259,000 of these debentures
were converted into 31,187 shares, 50,983 shares
and 23,399 shares of common stock, respectively. At December 31, 1994,
209,731 shares of common stock were reserved for conversions.
Interest expense on long-term debt amounted to $35.5 million in 1994,
$33.2 million in 1993 and $31.9 million in 1992. Aggregate maturities of
long-term debt will be $24.5 million in 1995, $75.0 million in 1996, none in
1997, $5.0 million in 1998 and $78.8 million in 1999.
I. Derivative Financial Instruments
The Company is exposed to risk from fluctuations in energy prices in
the normal course of business. The Company uses exchange-traded energy
futures contracts to hedge exposures to changes in energy prices, primarily
relating to its gas marketing operations. The Company also trades in energy
futures. Energy futures contracts are commitments to either purchase or
sell a designated commodity, generally natural gas or crude oil, at a future
date for a specified price and may be settled in cash or through delivery.
The contracts used by the
Company cover one-month periods from one to eighteen months in the future.
Initial margin requirements are met in cash or other instruments, and
changes in contract values are settled daily. Energy futures contracts have
minimal credit risk because futures exchanges are the counterparties.
At December 31, 1994, natural gas futures contracts for the purchase of
10.8 Bcf and the sale of 3.7 Bcf were outstanding as hedges on future
transactions. At December 31, 1994, deferrals related to hedging activities
include realized losses of $.2 million and unrealized losses of $1.5
million.
At December 31, 1994, there were no outstanding energy futures
contracts held for trading purposes. During 1994, the average fair value of
traded contracts was $30,000 and a net gain of $1.5 million was realized.
The value of these financial instruments is subject to fluctuations in
market prices for natural gas and crude oil. Exposure to this risk is
managed by maintaining open positions within defined trading limits.
J. 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.
The estimated fair value of long-term debt, including the portion due
within one year, at December 31, 1994 and 1993 would be $430.2 million and
$433.0 million, 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
percent Debentures and 7 1/2 percent
Debentures may not be redeemed prior to maturity. The
9.9 percent Debentures require payment of premiums
for early redemption, exclusive
of annual sinking fund requirements.
The futures described in Note I are reflected in other current assets
at fair value of $(1.5) million.
K. Concentrations of Credit Risk
Revenues and related accounts receivable from exploration and
production operations are generated primarily from the sale of produced
natural gas to utility and industrial customers located mainly in the
Appalachian area; the sale of produced oil to refinery customers in the
Rocky Mountain and Appalachian areas; and the sale of produced natural gas
liquids to a refinery customer in Kentucky.
Natural gas marketing operating revenues and related accounts
receivable are generated from the nationwide marketing of natural gas to
brokers and large volume utility and industrial customers; and the sale of
produced natural gas liquids and intrastate transportation of natural gas in
Louisiana.
Natural gas distribution operating revenues and related accounts
receivable are generated from state-regulated utility natural gas sales and
transportation 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.
Natural gas transmission operating revenues and related accounts
receivable are generated from FERC-regulated interstate pipeline
transportation and storage service for the affiliated utility, Equitable
Gas, as well as other utility and end-user customers located in nine mid-
Atlantic and northeastern states.
The Company is not aware of any significant credit risks which have not
been recognized in provisions for doubtful accounts.
L. Financial Information by Business Segment
Beginning in 1994, the Company expanded the reporting of operations to
comprise four segments. Exploration and production acitivities comprise the
exploration, development, production and sale of natural gas and oil,
extraction and sale of natural gas liquids and contract drilling. Natural
gas marketing activities comprise marketing of natural gas, extraction and
sale of natural gas liquids and intrastate transportation. Natural gas
distribution activities comprise the operations of the Company's state-
regulated natural gas utility. Natural gas transmission activities comprise
gas transportation, gathering, storage and marketing activities involving
the Company's three FERC-regulated gas pipelines.
The following table sets forth financial information for each of the
business segments:
Years Ended December 31,
1994 1993 1992
(Thousands)
Operating Revenues:
Exploration and production $ 195,795 $ 202,422 $ 191,478
Natural gas marketing 890,778 599,624 314,626
Natural gas distribution 390,475 335,149 328,022
Natural gas transmission 116,769 188,882 203,401
Sales between segments (196,537) (231,283) (225,153)
--------- --------- ----------
Total $1,397,280 $1,094,794 $ 812,374
========= ========= ==========
Operating Income:
Exploration and production $ 30,843 $ 42,453 $ 36,348
Natural gas marketing 4,089 11,700 4,850
Natural gas distribution 43,180 45,714 51,372
Natural gas transmission 32,136 30,630 21,856
--------- --------- ---------
Total $ 110,248 $ 130,497 $ 114,426
========= ========= =========
Identifiable Assets:
Exploration and production $ 724,144 $ 699,322 $ 666,924
Natural gas marketing 396,166 386,040 33,092
Natural gas distribution 690,068 660,889 610,830
Natural gas transmission 297,140 302,102 278,109
Eliminations (88,396) (101,446) (120,531)
--------- --------- ---------
Total $2,019,122 $1,946,907 $1,468,424
========= ========= =========
Depreciation and Depletion:
Exploration and production $ 57,196 $ 47,645 $ 45,569
Natural gas marketing 11,702 5,778 69
Natural gas distribution 15,196 14,624 12,425
Natural gas transmission 9,253 8,847 7,877
--------- --------- ---------
Total $ 93,347 $ 76,894 $ 65,940
========= ========= =========
Capital Expenditures:
Exploration and production $ 84,460 $ 101,203 $ 52,719
Natural gas marketing 15,765 195,042 204
Natural gas distribution 32,712 26,077 22,593
Natural gas transmission 13,237 17,089 24,073
--------- --------- ---------
Total $ 146,174 $ 339,411 $ 99,589
========= ========= =========
M. 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 any losses resulting from claims of liability under the 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 natural gas marketing segment and exploration and production
segment, respectively. 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 million 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.
N. Commitments and Contingencies
Rent expense was $9.7 million in 1994, $9.8 million in 1993 and $9.3
million in 1992. Long-term leases are principally for division operating
headquarters and warehouse buildings and computer hardware and have renewal
options ranging to 19 years from December 31, 1994. Future minimum rentals
for all noncancelable long-term leases at December 31, 1994 are as follows:
1995, $5.9 million; 1996, $5.3 million; 1997, $4.6 million; 1998, $3.2
million; 1999, $2.6 million, and $15.7 million thereafter for a total of
$37.3 million.
The Company has annual commitments of approximately $31 million for
demand charges under existing long-term contracts with pipeline suppliers
for periods extending up to 8 years at December 31, 1994, which relate to
gas distribution operations. 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. The
estimated costs associated with identified situations that require remedial
action are accrued.
However, certain of these costs are deferred as regulatory assets when
recoverable through regulated rates. 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 and
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 M.
March June September December
31 30 30 31
(Thousands except per share amounts)
1994
Operating revenues $439,538 $316,122 $297,712 $343,908
Operating income 60,979 10,054 12,847 26,368
Net income 36,359 6,057 2,381 15,932
Earnings per share $1.05 $.18 $.07 $.46
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
P. Natural Gas and Oil Producing Activities
The supplementary information summarized below presents the results of
natural gas and oil activities for the exploration and production segment in
accordance with Statement of Financial Accounting Standards 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 percent of total Company proved reserves
for the years presented.
(1) Production Costs
The following table presents the costs incurred relating to natural gas
and oil production activities:
1994 1993 1992
(Thousands)
At December 31:
Capitalized costs. . . . . $909,443 $836,638 $748,325
Accumulated depreciation
and depletion . . . . 304,835 256,508 216,005
------- ------- -------
Net capitalized costs. . . . $604,608 $580,130 $532,320
======= ======= =======
Costs incurred :
Property acquisition . .. $ 8,335 $ 29,345 $ 663
Exploration. . . . . . . . 22,783 13,928 13,166
Development. . . . . . . . 60,690 62,336 46,321
(2) Results of Operations for Producing Activities
The following table presents the results of operations related to
natural gas and oil production:
1994 1993 1992
(Thousands)
Revenues:
Affiliated . . . . . . . .$ 16,564 $ 15,467 $ 8,964
Nonaffiliated . . . . . . 136,029 140,380 127,369
Production costs . . . . . . 33,891 33,620 30,385
Exploration expenses . . . . 16,634 13,559 16,439
Depreciation and depletion . 52,505 43,841 40,744
Income tax expense . . . . . 3,602 5,039 5,221
------- ------- -------
Results of operations from
producing activities
(excluding corporate
overhead). . . . . . . . .$ 45,961 $ 59,788 $ 43,544
======= ======= =======
(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 1994 1993 1992
(Millions of Cubic Feet)
Proved developed and
undeveloped reserves:
Beginning of year. . . . . . . 822,583 720,032 695,898
Revision of previous estimates. 18,663 9,399 25,736
Purchase of natural gas
in place - net (a) . . . . . 6,307 86,113 434
Extensions, discoveries and
other additions. . . . . . . 89,918 60,589 46,207
Production . . . . . . . . . . (62,507) (53,550) (48,243)
------- ------- -------
End of year (b). . . . . . . . 874,964 822,583 720,032
======= ======= =======
Proved developed reserves:
Beginning of year. . . . . . . 759,282 665,194 621,846
End of year (c). . . . . . . . 771,635 759,282 665,194
(a) Includes purchases in Canada of 68,000 Mmcf in 1993.
(b) Includes proved reserves in Canada of 67,000 MMcf in 1994 and 70,000
MMcf in 1993.
(c) Includes proved developed reserves in Canada of 43,000 MMcf in 1994 and
46,000 MMcf in 1993.
Oil 1994 1993 1992
(Thousands of Barrels)
Proved developed and
undeveloped reserves:
Beginning of year . . . . . 16,468 20,023 19,427
Revision of previous estimates 2,601 (4,876) 951
Purchase (sale) of oil
in place - net (a) . . . . (169) 418 (138)
Extensions, discoveries and
other additions. . . . . . 1,369 3,015 2,189
Production. . . . . . . . . (1,986) (2,112) (2,406)
------ ------ ------
End of year (b) . . . . . . 18,283 16,468 20,023
====== ====== ======
Proved developed reserves:
Beginning of year . . . . . 16,442 18,540 17,072
End of year (c) . . . . . . 18,110 16,442 18,540
(a) Includes purchases in Canada of 68,000 barrels in 1993.
(b) Includes proved reserves in Canada of 75,000 barrels in 1994 and 65,000
barrels in 1993.
(c) Includes proved developed reserves in Canada of 50,000 barrels in 1994
and 39,000 barrels in 1993.
(4) Standard Measure of Discounted Future Cash Flow (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 percent. 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:
1994 1993 1992
(Thousands)
Future cash inflows . . . . $1,983,757 $2,140,151 $2,058,973
Future production costs . . (562,841) (598,707) (551,987)
Future development costs. . (46,985) (24,579) (41,612)
Future income tax expenses. (361,486) (434,362) (409,970)
--------- --------- ---------
Future net cash flow. . . . 1,012,445 1,082,503 1,055,404
10 percent annual discount for
estimated timing of cash flows. . (471,778) (515,023) (507,082)
--------- --------- ---------
Standardized measure of discounted
future net cash flows (a). . . $ 540,667 $ 567,480 $ 548,322
========= ========= =========
(a) Includes $10,043,000 in 1994 and $31,267,000 in 1993 related to Canada.
Summary of changes in the standardized measure of discounted future net
cash flows:
1994 1993 1992
(Thousands)
Sales and transfers of gas
and oil produced - net. . $(118,702) $(122,227) $(105,948)
Net changes in prices, production
and development costs . . (135,742) (80,256) 11,370
Extensions, discoveries, and
improved recovery, less
related costs . . . . . 74,900 90,035 77,759
Development costs incurred. 16,037 18,482 27,807
Purchase (sale) of
minerals in place - net . 9,627 62,843 (142)
Revisions of previous
quantity estimates. . . . 19,189 (14,910) 1,709
Accretion of discount . . . 72,058 69,284 62,548
Net change in income taxes. 45,012 (8,584) (21,093)
Other . . (9,192) 4,491 (7,747)
-------- ------- -------
Net increase (decrease) . . (26,813) 19,158 46,263
Beginning of year . . . . . 567,480 548,322 502,059
-------- ------- -------
End of year . . . . . . . . $ 540,667 $ 567,480 $ 548,322
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 26, 1995, which will be
filed with the Commission within 120 days after the close of the Company's
fiscal year ended December 31, 1994.
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 26, 1995.
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 26, 1995.
Item 13. Certain Relationships and Related Transactions
Information required by Item 13 is incorporated herein by reference
to the section describing "Certain Relationships and Related Transactions"
in the Company's Definitive Proxy Statement relating to the annual meeting
of stockholders to be held on May 26, 1995.
PART IV
Item 14. Exhibits and Reports on Form 8-K
(a) 1. Financial statements
The financial statements listed in the accompanying index to
financial statements (page 52) are filed as part of this
annual report.
2. Financial Statement Schedule
The financial statement schedule listed in the accompanying
index to financial statements and financial schedule (page 53)
is filed as part of this annual report.
3. Exhibits
The exhibits listed on the accompanying index to exhibits
(pages 54 through 57) are filed as part of this annual report.
(b) Reports on Form 8-K filed during the quarter ended December 31,
1994.
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 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, 1994 25
Consolidated Balance Sheets
December 31, 1994 and 1993 26 & 27
Statements of Consolidated Cash Flows
for each of the three years in the
period ended December 31, 1994 28
Statements of Common Stockholders'
Equity for each of the three years in the
period ended December 31, 1994 29
Long-term Debt, December 31, 1994 and 1993 30
Notes to Consolidated Financial Statements 31 thru 48
2. Schedule for the Years Ended December 31,
1994, 1993 and 1992 included in Part IV:
II - Valuation and Qualifying
Accounts and Reserves 53
All other schedules are omitted since the subject matter thereof
is either not present or is not present in amounts sufficient to
require submission of the schedules.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
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)
1994
Accumulated
Provision
for Doubtful
Accounts $10,106 $10,010 $9,226(A) $10,890
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
Note:(A) Customer accounts written off, less recoveries.
2.01 (a)
Stock Purchase Agreement dated May 5,
1993 among Arkla, Inc., Arkla Finance
Corporation and Equitable Pipeline Company
for the purchase of Louisiana Intrastate Gas
Company
Filed as Exhibit 2.1 (a) to Form 8-K Dated
June 30, 1993
2.01 (b)
Schedule 4.1.11 to the Stock Purchase
Agreement pertaining to outstanding
litigation claims
Filed as Exhibit 2.1 (b) to Form 8-K Dated
June 30, 1993
2.01 (c)
Schedule 4.1.15 to the Stock Purchase
Agreement pertaining to environmental
matters
Filed as Exhibit 2.1 (c) to Form 8-K Dated
June 30, 1993
2.01 (d)
Letter Agreement Dated June 30, 1993
amending the Stock Purchase Agreement
Filed as Exhibit 2.1 (d) to Form 8-K Dated
June 30, 1993
3.01
Restated Articles of Incorporation of the
Company dated May 21, 1993 (effective
May 27, 1993)
Filed as Exhibit 3.01 to Form 10-K for the
year ended December 31, 1993.
3.02
By-Laws of the Company (amended through
December 16, 1994)
Filed herewith as Exhibit 3.02
4.01 (a)
Indenture dated as of April 1, 1983 between
the Company and Pittsburgh National Bank
relating to Debt Securities
Filed as Exhibit 4.01 (Revised) to Post-
Effective Amendment No. 1 to Registration
Statement (Registration No. 2-80575)
4.01 (b)
Instrument appointing Bankers Trust
Company as successor trustee to Pittsburgh
National Bank
Filed as Exhibit 4.01 (b) to Form 10-K for
the year ended December 31, 1993
4.01 (c)
Resolution adopted June 26, 1986 by the
Finance Committee of the Board of Directors
of the Company establishing the term of the
$75,000,000 of debentures, 8 1/4% Series
due July 1, 1996
Filed as Exhibit 4.01 (c) to Form 10-K for
the year ended December 31, 1993
4.01 (d)
Resolutions adopted June 22, 1987 by the
Finance Committee of the Board of Directors
of the Company establishing the terms of
the 75,000 units (debentures with warrants)
issued July 1, 1987
Filed as Exhibit 4.01 (d) to Form 10-K for
the year ended December 31, 1993
4.01 (e)
Resolution adopted April 6, 1988 by the Ad
Hoc Finance Committee of the Board of
Directors of the Company establishing the
terms and provisions of the 9.9%
Debentures issued April 14, 1988
Filed as Exhibit 4.01 (e) to Form 10-K for
the year ended December 31, 1993
4.01 (f)
Supplemental indenture dated March 15,
1991 with Bankers Trust Company
eliminating limitations on liens and additional
funded debt
Filed as Exhibit 4.3 to Form S-3
(Registration Statement 33-39505) filed
August 21, 1991
4.01 (g)
Resolution adopted August 19, 1991 by the
Ad Hoc Finance Committee of the Board of
Directors of the Company Addenda Nos. 1
thru 27, establishing the terms and
provisions of the Series A Medium-Term
Notes
Filed as Exhibit 4.05 to Form 10-K for the
year ended December 31, 1991
4.01 (h)
Resolutions adopted July 6, 1992 and
February 19, 1993 by the Ad Hoc Finance
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
Filed as Exhibit 4.05 to Form 10-K for the
year ended December 31, 1992
* 10.01
Equitable Resources, Inc. Key Employee
Restricted Stock Option and Stock
Appreciation Rights Incentive Compensation
Plan (as amended through March 17, 1989)
Refiled herewith as Exhibit 10.01 pursuant
to Rule 24 of SEC's Rules of Practice
* 10.02 (a)
Employment Agreement dated as of
March 18, 1988 with Frederick H. Abrew
Filed as Exhibit 10.02 (a) to Form 10-K for
the year ended December 31, 1993
* 10.02(b)
Amendment effective June 1, 1989 to
Employment Agreement with Frederick H.
Abrew
Filed as Exhibit 10.02 (b) to Form 10-K for
the year ended December 31, 1993
* 10.03 (a)
Employment Agreement dated as of
March 18, 1988 with Augustine A. Mazzei,
Jr.
Filed as Exhibit 10.03 (a) to Form 10-K for
the year ended December 31, 1993
* 10.03 (b)
Amendment effective June 1, 1989 to
Employment Agreement with Augustine A.
Mazzei, Jr.
Filed as Exhibit 10.03 (b) to Form 10-K for
the year ended December 31, 1993
* 10.04 (a)
Agreement dated December 15, 1989 with
Barbara B. Sullivan for deferred payment of
1990 director fees
Refiled herewith as Exhibit 10.04 (a)
pursuant to Rule 24 of SEC's Rules of
Practice
* 10.04 (b)
Agreement dated December 21, 1990 with
Barbara B. Sullivan for deferred payment of
1991 director fees
Filed as Exhibit 10.16 to Form 10-K for the
year ended December 31, 1990
* 10.04 (c)
Agreement dated December 13, 1991 with
Barbara B. Sullivan for deferred payment of
1992 director fees
Filed as Exhibit 10.16 to Form 10-K for the
year ended December 31, 1991
* 10.04 (d)
Agreement dated December 28, 1993 with
Barbara B. Sullivan for deferred payment of
1994 director fees
Filed as Exhibit 10.04 (d) to Form 10-K for
the year ended December 31, 1993
* 10.04 (e)
Agreement dated December 16, 1994 with
Barbara B. Sullivan for deferred payment of
1995 director fees
Filed herewith as Exhibit 10.04 (e)
* 10.05
Supplemental Executive Retirement Plan (as
amended and restated through December
16, 1994)
Filed herewith as Exhibit 10.05
* 10.06
Retirement Program for the Board of
Directors of Equitable Resources, Inc. (as
amended through August 1, 1989)
Refiled herewith as Exhibit 10.06 pursuant
to Rule 24 of SEC's Rules of Practice
* 10.07
Supplemental Pension Plan (as amended and
restated through December 16, 1994)
Filed herewith as Exhibit 10.07
* 10.08
Policy to Grant Supplemental Deferred
Compensation Benefits in Selected Instances
to a Select Group of Management or Highly
Compensated Employees (as amended and
restated through August 1, 1989)
Refiled herewith as Exhibit 10.08 pursuant
to Rule 24 of SEC's Rules of Practice
* 10.09 (a)
Equitable Resources, Inc. and Subsidiaries
Short-Term Incentive Compensation Plan
dated January 18, 1988
Refiled herewith as Exhibit 10.09 pursuant
to Rule 24 of SEC's Rules of Practice
* 10.09 (b)
Amendment dated February 17, 1993 to
Equitable Resources, Inc. and Subsidiaries
Short-Term Incentive Compensation Plan
Filed as Exhibit 10.22 to Form 10-K for the
year ended December 31, 1992
* 10.10 (a)
Agreement dated December 31, 1987 with
Malcolm M. Prine for deferred payment of
1988 director fees
Filed as Exhibit 10.10 (a) to Form 10-K for
the year ended December 31, 1993
* 10.10 (b)
Agreement dated December 30, 1988 with
Malcolm M. Prine for deferred payment of
1989 director fees
Filed as Exhibit 10.10 (b) to Form 10-K for
the year ended December 31, 1993
* 10.11 (a)
Agreement dated September 30, 1986 with
Daniel M. Rooney for deferred payment of
1986 and 1987 director fees
Filed as Exhibit 10.11 (a) to Form 10-K for
the year ended December 31, 1993
* 10.11 (b)
Agreement dated December 21, 1987 with
Daniel M. Rooney for deferred payment of
1988 director fees
Filed as Exhibit 10.11 (b) to Form 10-K for
the year ended December 31, 1993
* 10.11 (c)
Agreement dated December 30, 1988 with
Daniel M. Rooney for deferred payment of
1989 director fees
Filed as Exhibit 10.11 (c) to Form 10-K for
the year ended December 31, 1993
* 10.11 (d)
Agreement dated December 15, 1989 with
Daniel M. Rooney for deferred payment of
1990 director fees
Refiled herewith as Exhibit 10.11 (d)
pursuant to Rule 24 of SEC's Rules of
Practice
* 10.11 (e)
Agreement dated December 21, 1990 with
Daniel M. Rooney for deferred payment of
1991 director fees
Filed as Exhibit 10.27 to Form 10-K for the
year ended December 31, 1990
* 10.11 (f)
Agreement dated December 13, 1991 with
Daniel M. Rooney for deferred payment of
1992 director fees
Filed as Exhibit 10.27 to Form 10-K for the
year ended December 31, 1991
* 10.11 (g)
Agreement dated December 18, 1992 with
Daniel M. Rooney for deferred payment of
1993 director fees
Filed as Exhibit 10.27 to Form 10-K for the
year ended December 31, 1992
* 10.11 (h)
Agreement dated December 14, 1993 with
Daniel M. Rooney for deferred payment of
1994 director fees
Filed as Exhibit 10.11 (h) to Form 10-K for
the year ended December 31, 1993
* 10.11 (i)
Agreement dated December 15, 1994 with
Daniel M. Rooney for deferred payment of
1995 director fees
Filed herewith as Exhibit 10.11 (i)
10.12
Trust Agreement with Pittsburgh National
Bank to act as Trustee for Supplemental
Pension Plan, Supplemental Deferred
Compensation Benefits, Retirement Program
for Board of Directors, and Supplemental
Executive Retirement Plan
Refiled herewith as Exhibit 10.12 pursuant
to Rule 24 of SEC's Rules of Practice
* 10.13
Equitable Resources, Inc. Non-Employee
Directors' Stock Incentive Plan
Filed herewith as Exhibit 10.13
* 10.14
Equitable Resources, Inc. Long-Term
Incentive Plan
Filed herewith as Exhibit 10.14
* 10.15
Agreement dated December 31, 1994 with
Donald I. Moritz for consulting services
Filed herewith as Exhibit 10.15
11.01
Statement re Computation of Earnings Per
Share
Filed herewith as Exhibit 11.01
21
Schedule of Subsidiaries
Filed herewith as Exhibit 21
23.01
Consent of Independent Auditors
Filed herewith as Exhibit 23.01
99.01
Equitable Resources, Inc. Employees Savings
Plan Form 11-K Annual Report
Filed herewith as Exhibit 99.01
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:
(Frederick H. Abrew)
President and Chief Executive Officer
Date: March 17, 1995
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.
President and Chief Executive
Officer and Director
s/ Frederick H. Abrew (Principal Executive Officer) March 17, 1995
Frederick H. Abrew
Vice President and
s/ A. Mark Abramovic Chief Financial Officer March 17, 1995
A. Mark Abramovic
Vice President - Accounting
and Administration
s/ Joseph L. Giebel (Chief Accounting Officer) March 17, 1995
Joseph L. Giebel
s/ Clifford L. Alexander, Jr. Director March 17, 1995
Clifford L. Alexander, Jr.
s/ Merle E. Gilliand Director March 17, 1995
Merle E. Gilliand
s/ E. Lawrence Keyes, Jr. Director March 17, 1995
E. Lawrence Keyes, Jr.
s/ Thomas A. McConomy Director March 17, 1995
Thomas A. McConomy
s/ Donald I. Moritz Director March 17, 1995
Donald I. Moritz
s/ Malcolm M. Prine Director March 17, 1995
Malcolm M. Prine
Director
Daniel M. Rooney
s/ David S. Shapira Director March 17, 1995
David S. Shapira
s/ Barbara Boyle Sullivan Director March 17, 1995
Barbara Boyle Sullivan