This excerpt taken from the EGN 8-K filed Jul 26, 2006.
Higher Prices, Production Drive 31% Increase in 2nd Quarter Results
BIRMINGHAM, Alabama Energen Corporation (NYSE: EGN) announced today that it is raising its 2007 earnings guidance range by 10 cents and affirming its 2006 guidance. In addition, the Company reported strong second quarter financial results.
In other developments announced today:
Energen Resources 2006 production is up 5.6 percent over last year and exceeding our expectations, said Mike Warren, Energens chairman and chief executive officer. As we look forward to the remainder of 2006, we are raising our production estimate for the year by 2 Bcfe to 94 Bcfe; in addition, we are reducing our average shares outstanding for the year to reflect the effects of our stock buy-back program as of June 30, 2006. At the end of June, we had purchased just over 1 million shares of Energen stock.
With assumed prices applicable to unhedged volumes for the remainder of the year of $9 per thousand cubic feet (Mcf) for gas, $70 per barrel for oil and 92 cents per gallon for natural gas liquids (NGL) production, we anticipate earning within our current guidance range of $3.10-$3.30 per diluted share, Warren said. We also are comfortable with this range at current strip prices for the remainder of the year of roughly $7.50 per Mcf for gas and $74.50 for oil.
As for 2007, recent and substantial gas, oil and NGL hedges have prompted us to raise our earnings guidance by 10 cents to $3.90-$4.30 per diluted share. We have also adjusted our assumed prices for unhedged production, lowering gas to $9 per Mcf and raising oil to $70 per barrel the same assumptions in place for the remainder of 2006, Warren said.
As we develop a formal 2007 budget in the coming months, we anticipate making additional adjustments, said James McManus, Energens president. A preliminary assessment indicates that Energen Resources may be able to accelerate development of its proved undeveloped reserves, thereby increasing capital spending by $55-$75 million over current 2007 guidance of $98 million and generating a 2 1/2-3 1/2 Bcfe increase over current production estimates.
Energens 2007 budget also may include a reduced number of shares outstanding, reflecting the potential continuation of the Companys stock buy-back program in the latter half of 2006 and in 2007.
Energen Resources continues to expand its lease position in various shale formations across north-central Alabama and announced today that it has secured an additional 11,000 acres, bringing its total lease position to 151,000 acres. Energen Resources plans to drill a number of wells on the acreage over the next 24 months.