Non-GAAP Financial Measures

Adjusted Net Income is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles) which excludes certain non-cash mark-to-market derivative financial instruments. Adjusted income from continuing operations further excludes a loss on disposal of discontinued operations and a loss from discontinued operations. Energen believes that excluding the impact of these items is more useful to analysts and investors in comparing the results of operations and operational trends between reporting periods and relative to other oil and gas producing companies.

Net Income (GAAP)

Non-cash mark-to-market losses (net of $12.1 tax)

Adjusted Net Income from All Operations (Non-GAAP)

Loss on disposal of discontinued operations (net of $0.6 tax)

Loss from discontinued operations (net of $1.0 tax)

Adjusted Income from Continuing Operations (Non-GAAP)

Net Income (GAAP)

Non-cash mark-to-market losses (net of $15.1 tax)

Adjusted Net Income from All Operations (Non-GAAP)

Income from discontinued operations (net of $1.2 tax)

Adjusted Income from Continuing Operations (Non-GAAP)

Non-GAAP Financial Measures

Adjusted Net Income is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles) which excludes certain non-cash mark-to-market derivative financial instruments. Adjusted income from continuing operations further excludes a loss on disposal of discontinued operations and a loss from discontinued operations. Energen believes that excluding the impact of these items is more useful to analysts and investors in comparing the results of operations and operational trends between reporting periods and relative to other oil and gas producing companies.

Net Income (GAAP)

Non-cash mark-to-market losses (net of $15.1 tax)

Adjusted Net Income from All Operations (Non-GAAP)

Loss on disposal of discontinued operations (net of $0.6 tax)

Loss from discontinued operations (net of $1.0 tax)

Adjusted Income from Continuing Operations (Non-GAAP)

Net Income (GAAP)

Non-cash mark-to-market losses (net of $15.1 tax)

Adjusted Net Income from All Operations (Non-GAAP)

Income from discontinued operations (net of $1.2 tax)

Adjusted Income from Continuing Operations (Non-GAAP)

Non-GAAP Financial Measures

Earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses (EBITDAX) is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles). Adjusted EBITDAX from continuing operations further excludes a loss on disposal of discontinued operations, certain non-cash mark-to-market derivative financial instruments and a loss from discontinued operations. Energen believes these measures allow analysts and investors to understand the financial performance of the company from core business operations, without including the effects of capital structure, tax rates and depreciation. Further, this measure is useful in comparing the company and other oil and gas producing companies.

Consolidated Net Income (GAAP)

Interest expense

Income tax expense

Depreciation, depletion and amortization

Accretion expense

Exploration expense

Adjustment for loss on disposal of discontinued operations, net of tax

Adjustment for mark-to-market losses

Adjustment for (income) loss from discontinued operations, net of tax

Consolidated Adjusted EBITDAX from Continuing Operations (Non-GAAP)

Energen Resources Net Income (GAAP)

Interest expense

Income tax expense

Depreciation, depletion and amortization

Accretion expense

Exploration expense

Adjustment for loss on disposal of discontinued operations,net of tax

Adjustment for mark-to-market losses

Adjustment for (income) loss from discontinued operations, net of tax

Energen Resources Adjusted EBITDAX from Continuing Operations (Non-GAAP)

Non-GAAP Financial Measures

After-tax Cash Flows is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles). Energen believes after-tax cash flows are relevant because they are a measure of cash available to fund the Company’s capital expenditures, dividends, debt reduction, and other investments. Adjusted after-tax cash flows excluding Alagasco provides a measure of cash flows available to fund the Company’s exploration and production activities.

Energen Resources

Alabama Gas Corporation (GAAP)*

Consolidated Net Income (GAAP)*

Depreciation, depletion and amortization

Deferred income taxes

Exploratory expense

Other

After-tax Cash Flows (Non-GAAP)

Changes in assets and liabilities and other adjustments

Net Cash Provided by Operating Activities (GAAP)

Net Cash Provided by Operating Activities (GAAP)

Changes in assets and liabilities and other adjustments

After-tax Cash Flow (Non-GAAP)

Less: AGC cash flows from operations and other*

Adj. After-tax Cash Flows Excluding Alagasco (Non-GAAP)

(e) This estimate is a “forward-looking statement” as defined by the Securities and Exchange Commission. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A discussion of risks and uncertainties, which could affect future results of Energen and its subsidiaries, is included in the Company’s periodic reports filed with the Securities and Exchange Commission.