ENERGEN CORP - FORM 8-K - EX-99.3

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EX-99.2 - EX-99.2 - ENERGEN CORP	d489232dex992.htm
EX-99.1 - EX-99.1 - ENERGEN CORP	d489232dex991.htm
8-K - 8-K - ENERGEN CORP	d489232d8k.htm

Exhibit 99.3

Non-GAAP Financial Measures

Adjusted Net Income is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles) which excludes the effects of certain non-cash mark-to-market derivative financial instruments. Adjusted income from continuing operations further excludes impairment losses, certain prior period losses associated with a reduction in force, and income associated with divestitures. 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.


	Three Months Ended 9/30/17
Energen Net Income ($ in millions except per share data)	Net Income			Per Diluted Share
Net Income (Loss) All Operations (GAAP)		(18.5	)		(0.19	)
Non-cash mark-to-market losses (net of $22.1 tax)		40.2			0.41
Asset impairment, other (net of tax)		0.1			nm
Income associated with property sales (net of $2.0 tax)		(2.5	)		(0.03	)

Adjusted Income from Continuing Operations (Non-GAAP)		19.2			0.20


	Three Months Ended 9/30/16
Energen Net Income ($ in millions except per share data)	Net Income			Per Diluted Share
Net Income (Loss) All Operations (GAAP)		53.3			0.55
Non-cash mark-to-market gains (net of $8.9 tax)		(16.1	)		(0.17	)
Asset impairment, other (net of $0.3 tax)		0.3			nm
Reduction in force expenses (net of $0.2 tax)		0.3			nm
Income associated property sales (net of $32.3 tax)		(59.2	)		(0.61	)

Adjusted Income from Continuing Operations (Non-GAAP)		(21.4	)		(0.22	)

Note: Amounts may not sum due to rounding

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 impairment losses, certain non-cash mark-to-market derivative financial instruments, prior period losses associated with a reduction in force, and income associated with divestitures. 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.


Reconciliation To GAAP Information	Three Months Ended 9/30

($ in millions)	2017			2016
Energen Net Income (Loss) (GAAP)		(18.5	)		53.3
Income associated with property sales, net of tax*		(2.5	)		(59.2	)

Net Income (Loss) Excluding Property Sales (Non-GAAP)		(21.0	)		(5.9	)

Interest expense		9.9			9.0
Income tax expense (benefit) **		(11.2	)		(3.9	)
Depreciation, depletion and amortization **		131.8			108.0
Accretion expense **		1.5			1.6
Exploration expense **		0.6			nm
Adjustment for asset impairment		0.1			0.6
Adjustment for mark-to-market (gains)/ losses		62.3			(25.0	)
Adjustment for reduction in force expenses		0.0			0.5

Energen Adjusted EBITDAX from Continuing Operations (Non-GAAP)		174.0			84.8

Note: Amounts may not sum due to rounding

*For quarter to quarter comparability, excluded from GAAP income in the current quarter is an immaterial sale of certain unproved leasehold properties in Wyoming.

** Amount adjusted to exclude 2016 property sales in prior period. See reconciliation to GAAP Information for the Three Months Ended 9/30/2016.

Non-GAAP Financial Measures

The consolidated statement of income excluding certain divestments is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles). Energen believes excluding information associated with 2016 property sales provides analysts and investors useful information to understand the financial performance of the company from ongoing business operations. Further, this information is useful in comparing the company and other oil and gas producing companies operating primarily in the Permian Basin.

Energen Net Income (Loss) Excluding 2016 Property Sales

Reconciliation to GAAP Information

Three Months Ended
September 30, 2016

(in thousands except per share and production data)

GAAP

2016 Property Sales

Non-GAAP

Revenues

Oil, natural gas liquids and natural gas sales

163,973

2,162

161,811

Gain (loss) on derivative instruments

20,412

—

20,412

Total Revenues

184,385

2,162

182,223

Operating Costs and Expenses

Oil, natural gas liquids and natural gas production

42,280

1,253

41,027

Production and ad valorem taxes

10,987

621

10,366

O&G Depreciation, depletion and amortization

106,989

215

106,774

FF&E Depreciation, depletion and amortization

1,178

—

1,178

Asset impairment

587

—

587

Exploration

General and administrative†

21,710

(53

)

21,763

Accretion of discount on asset retirement obligations

1,556

1,555

(Gain) loss on sale of assets and other

(91,222

)

(91,371

)

149

Total costs and expenses

94,083

(89,328

)

183,411

Operating Income (Loss)

90,302

91,490

(1,188

)

Other Income/(Expense)

Interest expense

(8,987

)

—

(8,987

)

Other income

421

409

Total other expense

(8,566

)

(8,578

)

Loss Before Income Taxes

81,736

91,502

(9,766

)

Income tax expense (benefit)

28,422

32,289

(3,867

)

Net Income (Loss)

53,314

59,213

(5,899

)

Diluted Earnings Per Average Common Share

0.55

0.60

(0.06

)

Basic earning Per Average Common Share

0.55

0.60

(0.06

)

Oil

3,325

3,295

NGL

980

958

Natural Gas

993

950

Total Production (mboe)

5,298

5,203

Total Production (boepd)

57,587

1,033

56,554

Note: Amounts may not sum due to rounding

† General and administrative includes $515 of expense related to the reductions in force

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