-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LOm/G+OhU2vSht9ByzvGmDR+5nLQHjgW/v0BG1vWbkIgOG8n6nN5HCOi30WxfQ2N LLALYGqJLhbOCVtZ2WwBaw== 0000033213-97-000004.txt : 19970507 0000033213-97-000004.hdr.sgml : 19970507 ACCESSION NUMBER: 0000033213-97-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970324 SROS: NYSE SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITABLE RESOURCES INC /PA/ CENTRAL INDEX KEY: 0000033213 STANDARD INDUSTRIAL CLASSIFICATION: 4923 IRS NUMBER: 250464690 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03551 FILM NUMBER: 97561110 BUSINESS ADDRESS: STREET 1: 420 BLVD OF THE ALLIES CITY: PITTSBURGH STATE: PA ZIP: 15219 BUSINESS PHONE: 4122613000 MAIL ADDRESS: STREET 1: 420 BOULEVARD OF THE ALLIES CITY: PITTSBURGH STATE: PA ZIP: 15219 FORMER COMPANY: FORMER CONFORMED NAME: EQUITABLE GAS CO DATE OF NAME CHANGE: 19841120 10-K 1 FORM 10-K FOR YEAR ENDED DECEMBER 31, 1996 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, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________ COMMISSION FILE NUMBER 1-3551 EQUITABLE RESOURCES, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-0464690 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 420 BOULEVARD OF THE ALLIES 15219 PITTSBURGH, PENNSYLVANIA (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (412) 261-3000 Securities registered pursuant to Section 12(b) of the Act: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED Common Stock, no par value New York Stock Exchange Philadelphia Stock Exchange 7 1/2% Debentures due July 1, 1999 New York Stock Exchange 9 1/2% Convertible Subordinated New York Stock Exchange Debentures due 2006 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 nonaffiliates of the registrant as of February 28, 1997: $1,051,937,624 The number of shares outstanding of the issuer's classes of common stock as of February 28, 1997: 35,508,443 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 23, 1997, to be filed with the Commission within 120 days after the close of the Company's fiscal year ended December 31, 1996. Index to Exhibits - Page 61 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 15 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 24 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 56 PART III Item 10 Directors and Executive Officers of the Registrant 57 Item 11 Executive Compensation 57 Item 12 Security Ownership of Certain Beneficial Owners and Management 57 Item 13 Certain Relationships and Related Transactions 57 PART IV Item 14 Exhibits and Reports on Form 8-K 58 Index to Financial Statements Covered by Report of Independent Auditors 59 Index to Exhibits 61 Signatures 64 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 directly, or through other wholly-owned subsidiaries, owns all the capital stock of the principal operating subsidiaries: Equitable Resources Energy Company ("EREC"), ERI Services, Inc. ("ERI Services"), Kentucky West Virginia Gas Company, L.L.C. ("Kentucky West"), Equitrans, L.P. ("Equitrans"), Nora Transmission Company ("Nora"), Equitable Resources (Canada) Limited ("Equitable Canada"), Louisiana Intrastate Gas Company, L.L.C. ("LIG"), Equitable Storage Company, L.L.C. ("Equitable Storage"), Equitable Power Services Company ("Power Services"), and Three Rivers Pipeline Corporation ("Three Rivers"). In 1996, the Company formed ERI Services as a successor to the former Equitable Resources Marketing Company. In January 1997, two other subsidiaries, Conogen, Inc., ("Conogen") and Pequod Associates, Inc. ("Pequod") were merged into ERI Services. The Companies operate in the Appalachian area and, to a lesser extent, in the Rocky Mountain, Northeast, Southwest, Louisiana and Gulf Coast offshore areas, the Canadian Rockies and have interests in Latin America. The Companies engage primarily in the exploration for, development, production, purchase, transmission, storage, distribution and marketing of natural gas and electricity, the extraction of natural gas liquids, the exploration for, development, production and sale of oil, contract drilling, cogeneration development, water efficiency and program development, central facility plant operations and performance contracting for commercial, industrial and institutional customers and various government facilities. (b) and (b)(1) In order to more accurately reflect the Company's lines of business, the Company began the reporting of its business operations in three business segments beginning in 1996: supply and logistics, utilities, and services. Financial information by business segment is presented in Note P to the consolidated financial statements contained in Part II. (b)(2) Not applicable. (c)(1)SUPPLY AND LOGISTICS. The supply and logistics segment's activities include exploration and production of natural gas and oil, trading of natural gas and electricity, extraction and sale of natural gas liquids, underground storage, and intrastate transportation. Exploration and production activities are conducted by EREC through its divisions and Equitable Canada. Its exploration and production 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. Exploration and production activities are also conducted in the Rocky Mountain area including the Canadian Rockies where EREC explores for, develops and produces oil, and to a lesser extent natural gas. In the Southwest and Gulf Coast offshore areas, EREC participates in exploration and development of gas and oil projects. EREC also owns an interest in two natural gas liquids plants in Texas. In Louisiana, LIG provides intrastate transportation of gas and extracts and markets natural gas liquids and Equitable Storage provides underground gas storage services. The supply and logistics segment's operations also include nationwide natural gas marketing, supply, peak shaving and transportation arrangements, and electricity marketing conducted by Power Services. ITEM 1. BUSINESS (CONTINUED) UTILITIES. The utilities segment's activities comprise distribution operations by Equitable Gas Company (a division of Equitable Resources, Inc.), the Company's state-regulated local distribution company, and transmission operations conducted by three FERC-regulated gas pipelines: Kentucky West, Equitrans, and Nora. 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 encompasses 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 266,000 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. Transmission operations include gas transportation, gathering, storage, and marketing activities. Kentucky West is an open access natural gas pipeline company which provides transportation service to Equitable Gas, the supply and logistics segment, and other industrial end-users and marketed gas sales to the services segment. Equitrans has production, storage and transmission facilities in Pennsylvania and West Virginia. Equitrans provides transportation service for Equitable Gas Company, the services segment, and nonaffiliates including customers in off-system markets. Storage services are provided for Equitable Gas Company, the services segment, and nonaffiliated customers. Marketed gas sales are to the services segment. Nora transports the gas produced by supply and logistics in Virginia and Kentucky. SERVICES. The services segment was created in 1996 and functions in a non-regulated environment. Its focus is to create and deliver customized energy solutions to improve overall energy efficiency. Activities include natural gas brokering, resource management, energy consulting and engineering services such as energy use analysis, customized energy systems, financing, facility management and energy procurement and management. The segment has operations in Pennsylvania, Connecticut, Massachusetts, California, Indiana, Ohio, West Virginia and Washington, D.C. ITEM 1. BUSINESS (CONTINUED) (c)(1)(i) Operating revenues as a percentage of total operating revenues for each of the three business segments during the years 1994 through 1996 are as follows: 1996 1995 1994 ---- ---- ---- Supply and Logistics: Natural gas marketing 52% 53% 53% Natural gas production 4 6 8 Oil 1 2 2 Natural gas liquids 5 5 5 Contract drilling 1 1 1 Other 2 4 1 ------ ----- ----- Total Supply and Logistics 65 71 70 ------ ----- ----- Utilities: Residential 15 19 19 Commercial 4 3 5 Industrial and utility 3 1 1 Transportation 2 4 3 Other 1 2 2 ------ ----- ----- Total Utilities 25 29 30 ------ ----- ----- Services: Natural gas marketing 9 - - Other 1 - - ------ ----- ----- Total Services 10 - - ------ ----- ----- Total Revenues 100% 100% 100% ====== ===== ===== See Note P to the consolidated financial statements in Part II regarding financial information by business segment. (c) (1) (ii) During 1996, the Company created a new subsidiary named ERI Services. This new unit is designed to create and deliver customized energy solutions to businesses, institutional customers and government facilities. ERI Services, a non-regulated subsidiary, offers commodity brokering of all forms of energy, including electricity and natural gas. It also provides cogeneration development, water efficiency and program development, central facility plant operations and performance contracting for commercial, industrial and institutional customers and various government facilities. (c) (1) (iii) The following tables summarize gas supply and disposition, gas transportation, and sales of oil and natural gas liquids for the years 1994 through 1996.
ITEM 1. BUSINESS (CONTINUED) 1996 ------------------------------------------------------------------------------------ Supply and Intersegment Logistics Utilities Services Eliminations Consolidated ------------------------------------------------------------------------------------- Gas Produced, Purchased and Sold (MMcf): Produced 57,295 2,518 59,813 --------- --------- --------- --------- --------- Purchased: Other producers 450,080 66,127 24,189 540,396 Inter-segment purchases 6,923 15,794 31,726 (54,443) --------- --------- --------- --------- --------- Total purchases 457,003 81,921 55,915 (54,443) 540,396 --------- --------- --------- --------- --------- Total produced and purchased 514,298 84,439 55,915 (54,443) 600,209 Deduct: Net increase (decrease) in gas in storage 1,656 1,656 Extracted natural gas liquids (equivalent gas volumes) 8,391 8,391 System use and unaccounted for 1,876 4,972 6,848 --------- --------- --------- --------- --------- Total 504,031 77,811 55,915 (54,443) 583,314 ========= ========= ========= ========= ========= Gas Sales (MMcf): Residential 30,549 30,549 Commercial 10,505 10,505 Industrial and Utility 26,647 (5,434) 21,213 Production 57,295 (34,152) 23,143 Marketing 446,736 10,110 55,915 (14,857) 497,904 --------- --------- --------- --------- --------- Total 504,031 77,811 55,915 (54,443) 583,314 ========= ========= ========= ========= ========= Natural Gas Transported (MMcf) 120,363 70,345 (36,624) 154,084 ========= ========= ========= ========= ========= Oil Produced and Sold (thousands of bls) 1,727 1,727 ========= ========= Natural Gas Liquids Sold (thousands of gallons) 280,579 280,579 ========= ========= Average Selling Price: Residential Gas Sales (per Mcf) $8.892 Commercial Gas Sales 6.512 Industrial and Utility Gas Sales 3.033 Produced Natural Gas $1.909 Marketed Natural Gas 2.281 3.083 $2.890 Oil (per barrel) 14.777 Natural Gas Liquids (per gallon) .359
ITEM 1. BUSINESS (CONTINUED) 1995 ------------------------------------------------------------------------------------ Supply and Intersegment Logistics Utilities Services Eliminations Consolidated ------------------------------------------------------------------------------------ Gas Produced, Purchased and Sold (MMcf): Produced 64,984 2,700 67,684 --------- --------- --------- --------- --------- Purchased: Other producers 463,551 49,962 513,513 Inter-segment purchases 13,356 13,286 (26,642) --------- --------- --------- --------- --------- Total purchases 476,907 63,248 (26,642) 513,513 --------- --------- --------- --------- --------- Total produced and purchased 541,891 65,948 (26,642) 581,197 Deduct: Net increase (decrease) in gas in storage (1,671) (1,671) Extracted natural gas liquids (equivalent gas volumes) 8,411 8,411 System use and unaccounted for 2,207 4,756 6,963 --------- --------- --------- --------- --------- Total 531,273 62,863 (26,642) 567,494 ========= ========= ========= ========= ========= Gas Sales (MMcf): Residential 29,494 29,494 Commercial 4,494 4,494 Industrial and Utility 17,991 (10,349) 7,642 Production 64,984 (465) 64,519 Marketing 466,289 10,884 (15,828) 461,345 --------- --------- --------- ---------- --------- Total 531,273 62,863 (26,642) 567,494 ========= ========= ========= ========= ========= Natural Gas Transported (MMcf) 122,405 72,265 (35,470) 159,200 ========= ========= ========= ========= ========= Oil Produced and Sold (thousands of bls) 1,932 1,932 ========= ========= Natural Gas Liquids Sold (thousands of gallons) 260,987 260,987 ========= ========= Average Selling Price: Residential Gas Sales (per Mcf) $ 9.048 Commercial Gas Sales 8.752 Industrial and Utility Gas Sales 2.069 Produced Natural Gas $ 1.610 Marketed Natural Gas 1.633 1.987 Oil (per barrel) 16.435 Natural Gas Liquids (per gallon) .282
ITEM 1. BUSINESS (CONTINUED) 1994 ------------------------------------------------------------------------------------- Supply and Intersegment Logistics Utilities Services Eliminations Consolidated ------------------------------------------------------------------------------------- Gas Produced, Purchased and Sold (MMcf): Produced 62,507 2,014 64,521 --------- --------- --------- --------- --------- Purchased: Other producers 389,710 52,895 442,605 Inter-segment purchases 6,328 12,948 (19,276) --------- --------- --------- --------- --------- Total purchases 396,038 65,843 (19,276) 442,605 --------- --------- --------- --------- --------- Total produced and purchased 458,545 67,857 (19,276) 507,126 Deduct: Net increase (decrease) in gas in storage 60 60 Extracted natural gas liquids (equivalent gas volumes) 7,923 7,923 System use and unaccounted for 2,082 6,659 8,741 --------- --------- --------- --------- --------- Total 448,540 61,138 (19,276) 490,402 ========= ========= ========= ========= ========= Gas Sales (MMcf): Residential 29,570 29,570 Commercial 9,681 9,681 Industrial and Utility 12,815 (3,148) 9,667 Production 62,507 (7,237) 55,270 Marketing 386,033 9,072 (8,891) 386,214 --------- --------- --------- --------- --------- Total 448,540 61,138 (19,276) 490,402 ========= ========= ========= ========= ========= Natural Gas Transported (MMcf) 103,726 62,615 (31,004) 135,337 ========= ========= ========= ========= ========= Oil Produced and Sold (thousands of bls) 1,986 1,986 ========= ========= Natural Gas Liquids Sold (thousands of gallons) 245,525 245,525 ========= ========= Average Selling Price: Residential Gas Sales (per Mcf) $8.974 Commercial Gas Sales 6.916 Industrial and Utility Gas Sales 2.491 Produced Natural Gas $1.973 Marketed Natural Gas 1.956 2.190 Oil (per barrel) 14.723 Natural Gas Liquids (per gallon) .270
ITEM 1. BUSINESS (CONTINUED) During 1996, a total of 600,209 MMcf of gas was produced and purchased by the Companies compared with 581,197 MMcf in 1995. The increase reflects greater marketing activity. GAS PURCHASES. Total purchases in 1996 amounted to 540,396 MMcf, of which 497,904 MMcf was applicable to marketing operations and 42,492 MMcf was for system supply, compared with 461,345 MMcf for marketing operations and 52,168 MMcf for system supply in 1995. 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 supply and logistics segment in 1996 of 57,295 MMcf decreased 7,689 MMcf from the 1995 total of 64,984 MMcf. Other production by the utilities segment in 1996 was 2,518 MMcf compared with the 1995 total of 2,700 MMcf. Production of crude oil in 1996 was 1,727,000 barrels, compared with 1,932,000 barrels in 1995. In 1996, the Company drilled 137 gross wells (83.8 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 of its gas production at a profit. NATURAL GAS AND OIL RESERVES. The estimate of proved developed and undeveloped gas reserves for the Company's exploration and production operation comprised 849.5 Bcf as of December 31, 1996. These reserves included 732.2 Bcf of proved developed reserves. The Company's oil reserves at December 31, 1996 consisted of 19.5 million barrels of proved developed and undeveloped reserves; proved developed oil reserves amounted to 18.5 million barrels. Of the total reserves, 78 percent is in the Appalachian area, 20 percent in the Rockies and 2 percent in the Gulf. See Note V 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 1995-96 heating season were 7.6 Bcf, compared with 5.9 Bcf the previous heating season. Net withdrawals for storage service customers of 15.0 Bcf were made during the 1995-96 heating season compared with 12.1 Bcf during 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 Company's marketing operations also have been in a favorable supply position and present reserves for the exploration and production operations are sufficient to sustain current production levels for at least the next decade. However, the rate of purchase of future supplies or development of reserves will depend largely on energy prices. ITEM 1. BUSINESS (CONTINUED) (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 EREC 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 EREC 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 supply and logistics and services segments' revenues are not subject to seasonal variation to the same degree as the utilities segment's 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 EREC 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 operations have been successful in meeting competition with aggressive marketing and by responding to market requirements with a portfolio of firm and interruptible services at competitive prices. The markets in which the services segment is active are highly competitive, with firms ranging from very small operations to substantial, vertically integrated electric and gas utilities active through marketing units. (c) (1) (xi) Not material. ITEM 1. BUSINESS (CONTINUED) (c)(1)(xii) The Company and its Subsidiaries are subject to federal, state and local environmental laws and regulations. Principal concerns are with respect to oil and thermal pollution of waterways, storage and disposal of hazardous wastes and liquids, and erosion and sedimentation control in pipeline construction work. For further discussion of environmental matters, see Management's Discussion and Analysis of Financial Condition and Results of Operations and Note T to the consolidated financial statements in Part II. (c)(1)(xiii) The Companies had 2,109 regular employees at the end of 1996. (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 1997 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. UTILITIES. Equitable Gas owns and operates natural gas distribution properties as well as other general property and equipment in Pennsylvania, West Virginia and Kentucky. Equitrans owns and operates production, underground storage and transmission facilities as well as other general property and equipment in Pennsylvania and West Virginia. Kentucky West owns and operates gathering and transmission properties as well as other general property and equipment in Kentucky. Three Rivers Pipeline Corporation owns transmission properties in central Pennsylvania. SUPPLY AND LOGISTICS. 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 segment also owns an intrastate pipeline system and four hydrocarbon extraction plants in Louisiana, a high-deliverability gas storage facility in Louisiana and a 15-mile interchange system that interconnects the storage facility to LIG. On February 4, 1997, the Company announced plans to acquire a 67.2 mile pipeline in southern Louisiana from the U.S. Department of Energy for $22 million. ITEM 2. PROPERTIES (CONTINUED) 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 Latin America. Information relating to Company estimates of natural gas and oil reserves and future net cash flows is summarized in Note V 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 (Supply and Logistics): 1996 1995 1994 ------ ------ ------ Gas - Mmcf 57,295 64,984 62,507 Oil - Thousands of Barrels 1,727 1,932 1,986 Natural Gas: Average sales price of natural gas produced during 1996, 1995 and 1994 was $1.91, $1.61 and $1.97 per Mcf, respectively. Average production cost (lifting cost) of natural gas during 1996, 1995 and 1994 was $.487, $.389, and $.424 per Mcf, respectively. Oil: Average sales price of oil produced during 1996, 1995, and 1994 was $14.78, $16.44 and $14.72 per barrel, respectively. Average production cost (lifting cost) of oil during 1996, 1995 and 1994 was $3.82, $3.30 and $3.73 per barrel, respectively. Gas Oil ------- ------- Total productive wells at December 31, 1996: Total gross productive wells 4,386 721 Total net productive wells 3,906 465 Total acreage at December 31, 1996: Total gross productive acres 616,000 Total net productive acres 513,000 Total gross undeveloped acres 2,428,000 Total net undeveloped acres 1,941,000 ITEM 2. PROPERTIES (CONTINUED) Number of net productive and dry exploratory wells and number of net productive and dry development wells drilled: 1996 1995 1994 ------ ------ ------ Exploratory wells: Productive 3.3 1.6 7.0 Dry 5.8 2.8 5.7 Development wells: Productive 73.1 39.1 126.9 Dry 1.6 2.6 5.3 As of December 31, 1996, there were no 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. 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. 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, 1996. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (b) Identification of executive officers - - -------------------------- ------------------------ =========================== Name and Age Title Business Experience - - -------------------------- ------------------------ =========================== Frederick H. Abrew (59) President and Chief First elected to present Executive Officer position January 1, 1995; President and Chief Operating Officer from December 17, 1993; Executive Vice President and Chief Operating Officer from June 1, 1992; Executive Vice President from June 1, 1991. - - -------------------------- ------------------------ =========================== A. Mark Abramovic (48) Senior Vice President First elected to present and Chief Financial position May 23, 1996; Officer Vice President and Chief Financial Officer from 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. - - -------------------------- ------------------------ =========================== R. Gerald Bennett (54) Senior Vice President First elected to present position June 1, 1996; President - Fuel Resources, Inc. from February 1991. ------------------------- ------------------------ =========================== Dan C. Eaton (48) Vice President - First elected to position Strategic Planning May 23, 1996; Vice (Resigned 12/31/96) President-Strategic and Financial Planning from May 26, 1995; Director Finance Analysis, H.J. Heinz, Pittsburgh, PA, from April 1994; Vice President - Finance of Weight Watchers Foods, Pittsburgh, PA, from August 1992; Vice President - Finance of Heinz Canada LTD, Toronto, Canada, from June 1991. - - -------------------------- ------------------------ =========================== John C. Gongas, Jr. (52) Senior Vice President First elected to present position May 23, 1996; Vice President-Corporate Operations from May 26, 1995; Vice President - Utility Group from 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. - - -------------------------- ------------------------ =========================== Name and Age Title Business Experience - - -------------------------- ------------------------ =========================== Craig G. Goodman (47) Vice President - First elected to present Regulatory Affairs and position May 23, 1996; Public Policy Senior Vice President - Law, Regulation and Public Policy of ERI Incorporated from March 1, 1996; Vice President of Government Affairs for Mitchell Energy & Development Corporation from November 1989. - - -------------------------- ------------------------ =========================== Augustine A. Mazzei, Jr. Senior Vice President First elected to present (60) and Chief Legal Officer position May 26, 1995; (Retired 11/1/1996) Senior Vice President and General Counsel from June 1, 1988. - - -------------------------- ------------------------ =========================== Edward J. Meyer (58) Senior Vice President First elected to present position October 28, 1996; Manager, Special Projects of Amerada Hess Corporation from November 1991; Vice President - Marketing and Strategic Planning of Sun Refining and Marketing Company (Sunoco) from October 1989. - - -------------------------- ------------------------ =========================== Audrey C. Moeller (61) Vice President and First elected to present Corporate Secretary position May 22, 1986. - - -------------------------- ------------------------ =========================== Johanna G. O'Loughlin Vice President and First elected to present (50) General Counsel position December 19, 1996; Deputy General Counsel from April 1996; Senior Vice President and General Counsel of Fisher Scientific Company from June 1986. - - -------------------------- ------------------------ =========================== Gregory R. Spencer (48) Senior Vice President First elected to present and Chief position May 23, 1996. Administrative Officer Vice President - Human Resources and Administration from May 26, 1995; Vice President - Human Resources from October 10, 1994; Vice President of Human Resources Administration of AMSCO International, Inc., Pittsburgh, PA, from May 1993; General Manager-Human Resources of U.S. Steel Group of USX Corporation, Pittsburgh, PA, from 1991. ------------------------- ------------------------ =========================== Richard D. Spencer (42) Vice President and First elected to present Chief Information position April 1, 1996; Officer Manager - Technology Programs of General Electric Corporation from February 1991; Manager, GE Aerospace Computer Services from February 1990. - - -------------------------- ------------------------ =========================== Name and Age Title Business Experience ------------------------- ------------------------ =========================== Jeffrey C. Swoveland Vice President - First elected to present (41) Finance and Treasurer position May 23, 1996. Treasurer from December 15, 1995; Director of Alternative Finance from September 27, 1994; Vice President - Global Corporate Banking of Mellon Bank, Pittsburgh, PA, from June 1993; Assistant Vice President - Global Corporate Banking of Mellon Bank, Pittsburgh, PA, from June, 1989. =============================================================================== 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 23, 1996. =============================================================================== 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: 1996 1995 ------------------------- ------------------------ High Low Dividend High Low Dividend 1st Quarter 31 1/2 27 3/4 $.295 29 5/8 26 7/8 $.295 2nd Quarter 30 5/8 27 3/4 .295* 31 1/4 27 5/8 .295* 3rd Quarter 29 7/8 25 1/4 .295 30 3/4 25 7/8 .295 4th Quarter 31 1/8 27 1/2 .295 31 3/8 28 3/4 .295 * Actually declared near the end of the preceding quarter. (b) As of December 31, 1996, there were 7,735 shareholders of record of the Company's common stock. (c)(1) The indentures under which the Company's long-term debt is outstanding contain provisions limiting the Company's right to declare or pay dividends and make certain other distributions on, and to purchase any shares of, its common stock. Under the most restrictive of such provisions, $387,188,000 of the Company's consolidated retained earnings at December 31, 1996 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 1996 1995 1994 1993 1992 ------------------------------------------------------------- (Thousands Except Per Share Amounts) Operating revenues $1,861,799 $1,425,990 $1,397,280 $1,094,794 $ 812,374 ========== ========== ========== ========== ========== Net income $ 59,379 $ 1,548(a) $ 60,729 $ 73,455 $ 60,026 ========== ========== ========== ========== ========== Earnings per share of common stock $1.69 $.04 $1.76 $2.27 $1.92 ===== ==== ===== ===== ===== Total assets $2,096,299 $1,963,313 $2,019,122 $1,946,907 $1,468,424 Long-term debt $ 422,112 $ 415,527 $ 398,282 $ 378,845 $ 346,693 Cash dividends paid per share of common stock $1.18 $1.18 $1.15 $1.10 $1.04 (a) Includes charge for impairment of assets and nonrecurring gains. See Notes C, D and E to the consolidated financial statements. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Equitable's consolidated net income for 1996 was $59.4 million, or $1.69 per share, compared with $1.5 million, or $.04 per share, for 1995 and $60.7 million, or $1.76 per share, for 1994. Earnings for 1996 include an after-tax gain of $4.4 million, or $.13 per share, from the curtailment of the Company's defined benefit pension plan for certain non-utility employees as more fully described in Note G to the consolidated financial statements. Although a nonrecurring gain, the curtailment will reduce operating costs in the future. Earnings for 1995 include an after-tax charge of $74.2 million, or $2.12 per share, due to the recognition of impairment of assets of $121.1 million, pursuant to the methodology of Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", as more fully described in Note C to the consolidated financial statements. The results for 1995 also include a non-recurring after-tax gain of $29.1 million, or $.83 per share, related to the Columbia Gas Transmission (Columbia) bankruptcy settlement and $6.6 million, or $.19 per share, resulting from regulatory approval for accelerated recovery of future gas costs as described in Notes E and D, respectively, to the consolidated financial statements. The increase in income for 1996 compared to 1995, excluding the effect of the items detailed above, is due to lower depletion rates, a 19% increase in the average selling price for produced natural gas, lower interest costs and higher margins from sale of natural gas liquids. These items were partially offset by lower nonconventional fuels tax credits, a 12% decline in natural gas production and costs incurred for the start-up and development of new operations. The lower interest costs reflect lower average balances outstanding, lower short-term rates, and lower long-term rates as a result of the July 1996 refinancing of higher-cost long-term debt as more fully described in Note L to the consolidated financial statements. The lower nonconventional fuels tax credits reflect the November 1995 sale of interest in certain properties as more fully described in Note R to the consolidated financial statements. The decline in natural gas production includes the October 1995 sale of non-core Appalachian properties as described in Note Q to the consolidated financial statements. The decrease in earnings for 1995 compared to 1994, excluding the effect of the items detailed above, is due primarily to a 19 percent decline in the average selling price for produced natural gas, increased operating expenses and higher interest costs. RESULTS OF OPERATIONS In 1996, the Company began reporting operations in three business segments - - -- supply and logistics, utilities, and services. The supply and logistics segment represents primarily the operations previously reported as the exploration and production segment and the energy marketing segment. The utilities segment represents primarily the operations previously reported as the natural gas distribution segment and the natural gas transmission segment. The services segment represents a portion of marketed gas sales previously reported in the other segments along with several new lines of business. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS (CONTINUED) This discussion supplements the detailed financial information by business segment presented in Note P to the consolidated financial statements. Parenthetical percentages included in the discussion of operating income denote the approximate impact relative to the change. SUPPLY AND LOGISTICS Supply and logistics operations are comprised of the sale of produced natural gas, oil and natural gas liquids, contract drilling, marketing of natural gas and electricity, and storage and intrastate transportation of natural gas in Louisiana. Operating revenues were $1,318.7 million in 1996 compared with $1,059.9 million in 1995 and $1,012.1 million in 1994. The 1995 revenues include $40.2 million of nonrecurring amounts from the Columbia bankruptcy settlement and $11.0 million of additional revenue from direct bill settlements as described in Notes E and D, respectively, to the consolidated financial statements. The increase in revenues for 1996 compared to 1995 is due to an increase in average selling prices for marketed and produced natural gas of 40% and 19%, respectively, an increase in average selling price and production of natural gas liquids of 27% and 8%, respectively, and initial revenues from the marketing of electricity. These increases were partially offset by the nonrecurring amounts in 1995, a 12% decline in natural gas production, lower marketed natural gas sales and lower average selling prices and production of oil. Excluding the nonrecurring amounts in 1995, revenues were substantially the same for 1995 and 1994. Increases in the sales of marketed and produced natural gas of 21% and 4%, respectively, higher production and average selling prices for natural gas liquids and 12% higher average selling prices for oil were offset by a decrease in the average selling price for marketed and produced natural gas of 17% and 19%, respectively. SUPPLY AND LOGISTICS 1996 1995 1994 - - ------------------------------------------------------------------------------ OPERATING REVENUES (THOUSANDS): Marketed Natural Gas............... $ 1,019,220 $ 761,465 $ 755,015 Produced Natural Gas .............. 109,400 104,630 123,354 Produced Natural Gas Liquids....... 100,628 73,620 66,357 Produced Oil....................... 25,520 31,753 29,239 Contract Drilling.................. 19,190 14,324 15,427 Marketed Electricity............... 15,167 - - Natural Gas Transportation......... 7,670 9,405 9,266 Natural Gas Storage................ 1,099 - - Direct Billing Settlements......... 7,815 32,582 7,815 Other.............................. 12,952 32,075 5,646 - - ------------------------------------------------------------------------------ Total Revenues................... $ 1,318,661 $ 1,059,854 $ 1,012,119 ============================================================================== SALES QUANTITIES: Marketed Natural Gas (MMcf)........ 446,736 466,289 386,033 Produced Natural Gas (MMcf)........ 57,295 64,984 62,507 Oil (MBls)......................... 1,727 1,932 1,986 Natural Gas Liquids (thousands of gallons)........... 280,579 260,987 245,525 Transportation Deliveries (MMcf)... 120,363 122,405 103,726 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) SUPPLY AND LOGISTICS (CONTINUED) Cost of energy purchased includes natural gas and electricity purchased for marketing activities and natural gas purchased for the production of natural gas liquids. The cost of energy purchased amounted to $1,092.9 million in 1996 compared with $801.0 million in 1995 and $793.5 million in 1994. The increase in cost of energy purchased for 1996 compared to 1995 is due to higher prices for natural gas and the initial sales of electricity. The increase in cost of energy purchased for 1995 compared to 1994 reflects higher requirements for increased marketing activities and production of natural gas liquids, partially offset by lower average prices for natural gas. Other operating expenses were $173.7 million in 1996, $291.6 million in 1995, and $183.7 million in 1994. Other operating expenses for 1995 include a charge of $95.1 million for impairment of assets. The decrease in other operating expenses for 1996 compared to 1995, excluding the charge in 1995, is due primarily to lower depreciation and depletion expense reflecting lower depletion rates and a decrease in natural gas production. The increase in other operating expenses for 1995 compared to 1994, excluding the charge in 1995, is due primarily to increased depreciation and depletion expense reflecting higher natural gas production. Operating income was $52.0 million for 1996 compared with an operating loss of $32.7 million in 1995 and operating income of $34.9 million for 1994. The increase in operating income for 1996 compared to 1995, excluding the effect of nonrecurring items in 1995, is due to lower depreciation and depletion expense (55%), higher prices for produced natural gas (45%), and higher margins from sale of natural gas liquids (35%). These items were partially offset by lower gas production (30%) and lower margins for marketed natural gas (25%). The decrease in operating income for 1995 compared to 1994, excluding the effect of nonrecurring items in 1995, is due to lower average selling prices for produced natural gas (100%) and lower margins for marketed natural gas (25%), partially offset by higher natural gas production (20%). The 1997 capital expenditure program of $121.7 million for supply and logistics includes $107.8 million for exploration and production activities including $23.2 million for development of Appalachian holdings, $17.1 million for the Rocky Mountain area, and $67.5 million for drilling in the Gulf of Mexico and Gulf Coast Region. Market and price trends for natural gas and oil will continue to be the principal factors for the economic justification of drilling investments. The 1997 capital expenditure program also includes $5.0 million for additions to the LIG pipeline system and $8.9 million for other items. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) UTILITIES Utilities operations are comprised of the sale and transportation of natural gas to retail customers at state-regulated rates, interstate transportation and storage of natural gas subject to federal regulation and the marketing of natural gas. Revenues were $507.4 million in 1996 compared with $441.7 million in 1995 and $446.8 million in 1994. Revenues for 1995 include $4.8 million related to the Columbia bankruptcy settlement, as described in Note E to the consolidated financial statements. The increase in revenues for 1996 compared to 1995, excluding the effect of the settlement in 1995, is due to a 48% increase in sales to industrial and utility customers, the effect of commercial customers switching from transportation service to gas sales, a 55% increase in the average selling prices for marketed natural gas and increased retail gas sales reflecting 4% colder weather. The decrease in revenues for 1995 compared to 1994, excluding the effect of the settlement in 1995, is due primarily to the effect of commercial customers switching from gas sales to transportation service. UTILITIES 1996 1995 1994 - - ------------------------------------------------------------------------------ OPERATING REVENUES (THOUSANDS): Residential Gas Sales.............. $ 271,636 $ 266,855 $ 265,356 Commercial Gas Sales............... 68,408 39,331 66,956 Industrial and Utility Gas Sales... 80,833 37,228 31,924 Marketed Gas Sales................. 31,172 21,627 21,244 Transportation Service............. 38,167 52,731 42,198 Storage Service.................... 7,305 8,490 9,506 Other.............................. 9,920 15,470 9,602 - - ------------------------------------------------------------------------------ Total Revenues................. $ 507,441 $ 441,732 $ 446,786 ============================================================================== SALES QUANTITIES (MMCF): Residential Gas Sales.............. 30,549 29,494 29,570 Commercial Gas Sales............... 10,505 4,494 9,681 Industrial and Utility Gas Sales... 26,647 17,991 12,815 Marketed Gas Sales................. 10,110 10,884 9,072 Transportation Deliveries.......... 70,345 72,265 62,615 Heating Degree Days (Normal - 5,968) 5,978 5,748 5,607 Cost of energy purchased amounted to $246.3 million in 1996, $180.8 million in 1995, and $190.7 million in 1994. The increase in cost of energy purchased for 1996 compared to 1995 reflects commercial customers switching from transportation service to gas sales and higher industrial and utility gas sales. The decrease in gas costs for 1995 compared to 1994 is due to the effect of commercial customers switching from gas sales to transportation service, partially offset by higher industrial and utility gas sales. Other operating expenses amounted to $171.8 million in 1996, $205.3 million in 1995, and $180.8 million in 1994. Other operating expenses for 1995 include a charge of $25.6 million for impairment of assets. The decrease in other operating expenses for 1996 compared to 1995, excluding the charge in 1995, reflect savings from reengineering efforts that began in 1995. Other operating expenses for 1995 compared to 1994, excluding the charge, remained substantially the same. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) UTILITIES (CONTINUED) Operating income was $89.3 million in 1996 compared with $55.6 million in 1995 and $75.3 million in 1994. The increase in operating income for 1996 compared to 1995, excluding the charge for impairment of assets and Columbia settlement in 1995, is due primarily to lower operating expenses (40%), higher margins from marketed gas sales (25%) and higher distribution throughput reflecting colder weather (15%). Operating income for 1995, excluding the charge for impairment of assets and Columbia settlement, remained substantially the same as the 1994 results. The 1997 capital expenditure program of $40.4 million for utilities includes $14.3 million for the distribution operations, $9.7 million for interstate pipeline operations and $16.4 million for corporate information systems and other items. SERVICES Services operations are comprised of marketing of natural gas, cogeneration development, water efficiency and program development, performance contracting, and central facility plant operations. This operation was formed by combining certain of the Company's natural gas marketing activities with the operations of Independent Energy Company, Conogen, Inc. and Pequod Associates, Inc. which were acquired in 1995 and 1996. In February 1997, the Company also acquired Scallop Thermal Management, Inc. Operating revenues of $172.3 million in 1996 include $163.5 million from the sale and marketing of natural gas, and $8.8 million from cogeneration development and performance contracting. Cost of energy purchased amounted to $160.0 million for 1996 and other operating expenses, including operating, start-up and development costs for the new segment, were $24.8 million for 1996. Operating results were a loss of $12.5 million reflecting the start-up and development costs incurred in 1996. The 1997 capital expenditure program for services is $25.0 million to be used for energy related projects. CAPITAL RESOURCES AND LIQUIDITY OPERATING ACTIVITIES Cash required for operations is impacted primarily by the seasonal nature of the Company's natural gas distribution operations and volatility of oil and gas commodity prices. 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. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) CAPITAL RESOURCES AND LIQUIDITY (CONTINUED) The Company uses exchange-traded natural gas, crude oil and propane futures contracts and options and over-the-counter natural gas and crude oil swap agreements and options to hedge exposures to energy price changes. See Note M to the consolidated financial statements. INVESTING ACTIVITIES The Company's business requires major ongoing expenditures for replacements, improvements, and additions to its utility plant and continuing development and expansion of its resource production activities. Such expenditures during 1996 were $110.3 million. A total of $187.1 million has been authorized for the 1997 capital expenditure program. Short-term loans are also used as interim financing for a portion of capital expenditures. The Company expects to finance its 1997 capital expenditures with cash generated from operations and temporarily with short-term loans. Capital expenditures, including acquisitions, totaled about $814 million during the five-year period ended December 31, 1996, of which 64% 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 5.15% to 5.77% percent during 1996. At December 31, 1996, $199.3 million of commercial paper and $5.6 million of bank loans were outstanding at an average annual interest rate of 5.44%. The Company maintains a 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. During 1996, the Company refinanced the $75 million of 8 1/4% Debentures that matured on July 1, 1996 and $69.1 million of the Company's 9.9% Debentures due April 15, 2013. The 9.9% Debentures were redeemed through a tender offer that commenced in June 1996. The refinancing of these amounts was funded through issuance of $150 million of 7 3/4% Debentures due July 15, 2026. There is $100 million remaining available under a shelf registration filed with the Securities and Exchange Commission in June 1996. RATE REGULATION The local distribution operations of Equitable Gas Company are subject to rate regulation by state regulatory commissions in Pennsylvania, West Virginia and Kentucky. In Pennsylvania, where approximately 95% of its revenues are derived, Equitable Gas has been able to sustain current base rates for customers since 1991. In February, 1997, Equitable Gas filed a request with the Pennsylvania Public Utility Commission (PUC) for a $28 million annual increase in base rates. Included in the request is a proposal for ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) CAPITAL RESOURCES AND LIQUIDITY (CONTINUED) unbundling of the local distribution services to enable customers to choose their gas supplier. Gas purchased from another supplier would continue to be transported and delivered by Equitable Gas at regulated rates. The approval of the new rates, and the level of annual increase, will be subject to final approval by the PUC. Under statutory rules for regulatory proceedings, the PUC may delay implementation of the new rates until December 1, 1997. The Company's three interstate pipeline companies are subject to rate regulation by the Federal Energy Regulatory Commission (FERC). Under present rates, a majority of the annual costs are recovered through fixed charges to customers. The restructuring of rates pursuant to FERC Order 636 for Equitrans and Kentucky West Virginia Gas Company was completed in 1994 and 1993, respectively. Equitrans is required to file a section 4(e) rate proceeding to be effective August 1, 1997. Accounting for the operations of the Company's distribution and interstate pipeline operations is in accordance with the provisions of Statement of Financial Accounting Standards No. 71 "Accounting for the Effects of Certain Types of Regulation". As described in Note B to the consolidated financial statements, regulatory assets and liabilities are recorded to reflect future collections or payments through the regulatory process. The Company believes that it will continue to be subject to rate regulation that will provide for the recovery of deferred costs. FEDERAL INCOME TAX PROVISIONS Cash flow has been affected by the Alternative Minimum Tax (AMT) since 1988. The Company has incurred an AMT liability in each of the years 1988 through 1996 due to the nonconventional fuels tax credits. 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, 1996, the Company has available $72.5 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. In addition, in 1995, the Company sold an interest in properties producing nonconventional fuels, as described in Note R to the consolidated financial statements which will significantly reduce the generation of credits in the future. Therefore, the Company expects accelerated utilization of AMT credit carryforwards. The credits recorded in 1996, 1995, and 1994 reduced the Company's federal income tax provisions by $1.3 million, $13.1 million, and $16.4 million, respectively. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) 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 $3.2 million is accrued at December 31, 1996. Environmental matters are described in Note T to the consolidated financial statements. BALANCE SHEET CHANGES The increase in accounts receivable and accounts payable is due primarily to higher gas marketing activity. 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 change in deferred income taxes reflected in current assets and liabilities is due to the increase in deferred purchased gas costs. The goodwill reflected in the 1996 balance sheet is the result of acquisitions as described in Note S to the consolidated financial statements. 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 25 Statements of Consolidated Income for each of the three years in the period ended December 31, 1996 26 Statements of Consolidated Cash Flows for each of the three years in the period ended December 31, 1996 27 Consolidated Balance Sheets December 31, 1996 and 1995 28 - 29 Statements of Common Stockholders' Equity for each of the three years in the period ended December 31, 1996 30 Long-term Debt, December 31, 1996 and 1995 31 Notes to Consolidated Financial Statements 32 - 55 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, 1996 and 1995, 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, 1996. 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, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996 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 C to the consolidated financial statements, the Company adopted the provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets," in 1995. s/ Ernst & Young LLP ------------------------------ Ernst & Young LLP Pittsburgh, Pennsylvania February 19, 1997 EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 1996 1995 1994 ------------------------------------------------ (Thousands Except Per Share Amounts) Operating Revenues $ 1,861,799 $ 1,425,990 $ 1,397,280 Cost of Energy Purchased 1,368,156 911,357 926,905 --------------- -------------- -------------- Net operating revenues 493,643 514,633 470,375 --------------- -------------- -------------- Operating Expenses: Operation 213,773 198,502 192,799 Maintenance 26,544 26,635 31,737 Depreciation and depletion 82,381 104,625 93,347 Impairment of assets - 121,081 - Taxes other than income 42,157 41,838 42,244 --------------- -------------- -------------- Total operating expenses 364,855 492,681 360,127 --------------- -------------- -------------- Operating Income 128,788 21,952 110,248 Other Income 2,998 387 3,163 Interest Charges 41,825 50,098 43,905 --------------- -------------- -------------- Income (Loss) Before Income Taxes 89,961 (27,759) 69,506 Income Taxes (Benefit) 30,582 (29,307) 8,777 --------------- --------------- -------------- Net Income $ 59,379 $ 1,548 $ 60,729 =============== ============== ============== Average Common Shares Outstanding 35,188 34,793 34,509 =============== ============== ============== Earnings Per Share of Common Stock $ 1.69 $ .04 $ 1.76 =============== ============== ============== See notes to consolidated financial statements pages 32 to 55, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 1996 1995 1994 ------------------------------------ (Thousands) Cash Flows from Operating Activities: Net income $ 59,379 $ 1,548 $ 60,729 ---------- ---------- ---------- Adjustments to reconcile net income to net cash provided by operating activities: Impairment of assets - 121,081 - Depreciation and depletion 82,381 104,625 93,347 Deferred income taxes (benefits) 26,091 (74,348) (5,059) Other - net 1,058 (767) 1,566 Changes in other assets and liabilities: Accounts receivable and unbilled revenues (47,909) (74,275) 723 Gas stored underground (9,575) 5,179 2,958 Material and supplies (5,935) 154 (615) Deferred purchased gas cost (49,919) 14,730 (7,742) Prepaid expenses and other (10,281) (8,754) (9,592) Regulatory assets 379 1,810 (1,363) Accounts payable 49,784 58,791 (20,414) Accrued taxes 2,538 (1,481) 4,230 Refunds due customers (1,114) (6,252) 8,049 Deferred revenue (22,200) 129,874 - Other - net (9,109) 7,887 8,318 ---------- ---------- ---------- Total adjustments 6,189 278,254 74,406 ---------- ---------- ---------- Net cash provided by operating activities 65,568 279,802 135,135 ---------- ---------- ---------- Cash Flows from Investing Activities: Capital expenditures (110,284) (118,112) (146,174) Proceeds from sale of property 4,180 24,610 1,195 ---------- ---------- ---------- Net cash used in investing activities (106,104) (93,502) (144,979) ---------- ---------- ---------- Cash Flows from Financing Activities: Issuance of common stock 2,306 2,756 1,791 Purchase of treasury stock (33) (240) (395) Dividends paid (41,548) (41,098) (39,686) Proceeds from issuance of long-term debt 144,919 17,836 43,083 Repayments and retirements of long-term debt (150,440) (24,500) (1,971) Increase (decrease) in short-term loans 69,900 (134,300) 15,400 ---------- ---------- ---------- Net cash provided (used) by financing activities 25,104 (179,546) 18,222 ---------- ---------- ---------- Net (Decrease) Increase in Cash and Cash Equivalents (15,432) 6,754 8,378 Cash and Cash Equivalents at Beginning of Year 30,169 23,415 15,037 ---------- ---------- ---------- Cash and Cash Equivalents at End of Year $ 14,737 $ 30,169 $ 23,415 ========== ========== ========== Cash Paid During the Year for: Interest (net of amount capitalized) $ 43,025 $ 46,359 $ 40,105 ========== ========== ========== Income taxes $ 10,456 $ 41,272 $ 13,098 ========== ========== ========== See notes to consolidated financial statements pages 32 to 55, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1996 AND 1995 ASSETS 1996 1995 -------------------------------- (Thousands) Current Assets: Cash and cash equivalents $ 14,737 $ 30,169 Accounts receivable (less accumulated provision for doubtful accounts: 1996, $10,714; 1995, $10,539) 296,175 240,846 Unbilled revenues 24,157 31,752 Gas stored underground - current inventory 19,497 9,922 Material and supplies 18,512 12,577 Deferred purchased gas cost 60,079 10,160 Deferred income taxes - 1,505 Prepaid expenses and other 52,604 42,323 ------------- ------------- Total current assets 485,761 379,254 ------------- ------------- Property, Plant and Equipment: Supply & Logistics (successful efforts method) 1,220,756 1,164,390 Utilities 988,425 957,119 Services 1,810 139 ------------- ------------- Total property, plant and equipment 2,210,991 2,121,648 Less accumulated depreciation and depletion 731,306 664,065 ------------- ------------- Net property, plant and equipment 1,479,685 1,457,583 ------------- ------------- Other Assets: Regulatory assets 73,150 85,241 Goodwill 8,396 - Other 49,307 41,235 ------------- ------------- Total other assets 130,853 126,476 ------------- ------------- Total $ 2,096,299 $ 1,963,313 ============= ============= See notes to consolidated financial statements pages 32 to 55, inclusive
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1996 AND 1995 LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995 ------------------------------- (Thousands) Current Liabilities: Short-term loans $ 204,900 $ 135,000 Accounts payable 231,969 182,185 Accrued taxes 20,645 18,107 Accrued interest 11,852 14,842 Refunds due customers 14,889 16,003 Customer credit balances 7,051 9,759 Deferred income taxes 19,009 - Other 10,099 14,888 ------------- ------------- Total current liabilities 520,414 390,784 ------------- ------------- Long-Term Debt 422,112 415,527 ------------- ------------- Deferred and Other Credits: Deferred income taxes 260,700 265,737 Deferred investment tax credits 19,892 20,991 Deferred revenue 107,674 129,874 Other 23,224 25,321 ------------- ------------- Total deferred and other credits 411,490 441,923 ------------- ------------- Commitments and Contingencies - - ------------- ------------- Common Stockholders' Equity 742,283 715,079 ------------- ------------- Total $ 2,096,299 $ 1,963,313 ============= ============= See notes to consolidated financial statements pages 32 to 55, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES STATEMENTS OF COMMON STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 Common Stock (a) ------------------------ Foreign Common Shares No Retained Currency Stockholders' Outstanding Par Value Earnings Translation Equity --------------------------------------------------------------- (Thousands) Balance, January 1, 1994 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% debentures 31 345 Restricted stock option plan 8 313 Dividend reinvestment plan 47 1,504 Treasury stock (10) (310) ------ -------- ------- -------- --------- Balance, December 31, 1994 (b) 34,541 210,030 541,476 (1,504) 750,002 Net income for the year 1995 1,548 Dividends ($1.18 per share) (41,098) Foreign currency translation 366 Adjustment for Independent Energy Corporation pooling of interests 233 26 110 Stock issued: Conversion of 9 1/2% debentures 146 1,611 Restricted stock option plan 43 1,232 Dividend reinvestment plan 52 1,524 Treasury stock (8) (242) ------ -------- ------- -------- --------- Balance, December 31, 1995 (b) 35,007 214,181 502,036 (1,138) 715,079 Net income for the year 1996 59,379 Dividends ($1.18 per share) (41,548) Foreign currency translation (83) Acquisition of subsidiary 239 7,000 Stock issued: Conversion of 9 1/2% debentures 16 178 Restricted stock option plan 36 855 Dividend reinvestment plan 49 1,456 Treasury stock (1) (33) ------ -------- -------- -------- --------- Balance, December 31, 1996 (b)(c)(d) 35,346 $223,637 $519,867 $ (1,221) $ 742,283 ====== ======== ======== ======== ========= (a) Shares authorized: Common - 80,000,000 shares, Preferred - 3,000,000 shares. (b) Net of treasury stock: 1996 - 169,000 shares ($4,023,000); 1995 - 407,000 shares ($9,673,000); 1994 - 632,000 shares ($14,933,000). c) A total of 2,508,000 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. An additional 8,000,000 shares of the Company's authorized but unissued common stock has been reserved for possible use in connection with future acquisitions. (d) Retained earnings of $387,188,000 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 32 to 55, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES LONG-TERM DEBT DECEMBER 31, 1996 AND 1995 Annual Debt Maturities After Maturities One Year ------------------------------------------------- 1996 1995 1996 1995 ------------------------------------------------- (Thousands) 8 1/4% Debentures, due July 1, 1996 (a) $ - $ - $ - $ 75,000 7 1/2% Debentures, due July 1, 1999 ($75,000 principal amount, net of unamortized original issue discount) (b) - - 72,205 71,322 9 1/2% Convertible subordinated debentures, due January 15, 2006 - - 527 705 9.9% Debentures, due April 15, 2013 (c)(d) - - 5,880 75,000 7 3/4% Debentures, due July 15, 2026 - - 150,000 - Medium-term notes: 7.2% to 9.0% Series A, due 1998 thru 2021 - - 100,000 100,000 5.1% to 7.6% Series B, due 2003 thru 2023 - - 75,500 75,500 6.8% to 7.6% Series C, due 2007 thru 2018 - - 18,000 18,000 -------- -------- ----------- ------------ Total $ - $ - $ 422,112 $ 415,527 ======== ======== =========== ============ (a) 8 1/4% Debentures were retired with proceeds from issuance of long-term debt. See Note L to the consolidated financial statements. (b) Not redeemable prior to maturity. (c) $69,120,000 retired as of December 31, 1996 through tender offer. See Note L to the consolidated financial statements. (d) Annual sinking fund payments of $3,750,000 are required beginning in 1999. See notes to consolidated financial statements pages 32 to 55, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 A. Summary of Significant Accounting Policies (1) PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of Equitable Resources, Inc., and Subsidiaries (the "Company" or "Companies"). All subsidiaries are 100% owned. (2) PROPERTIES, DEPRECIATION AND DEPLETION: The cost of property additions, replacements and improvements capitalized includes labor, material and overhead. The cost of property retired, plus removal costs less salvage, is charged to accumulated depreciation. Depreciation for financial reporting purposes is provided on the straight-line method at composite rates based on estimated service lives, except for most gas and oil production properties as explained below. Service lives range from 5 to 70 years. 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. Service lives for gas and oil wells range from 3 to 35 years. (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 1996, $1.0 million in 1995 and $.9 million in 1994. 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 $2.6 million in 1996, $2.5 million in 1995 and $2.1 million in 1994. (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. A. Summary of Significant Accounting Policies (Continued) (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 and options and over-the-counter (OTC) natural gas and crude oil swap agreements and options to hedge exposures to energy price changes. Exchange-traded instruments are generally settled with off-setting positions but may be settled by delivery of commodities. OTC arrangements require settlement in cash. The margin accounts for exchange-traded futures contracts, which reflect daily settlements as market values change, are recorded in other current assets. Premiums on all options contracts are initially recorded in other current assets based on the amount exchanged. The Company sells options to reduce the overall cost of hedging. Unrealized losses on sold options are deferred to the extent of unamortized premiums. The fair values of swap agreements are generally recognized only when settled. Changes in market value of derivative financial instruments which qualify as hedges of firm commitments or anticipated transactions are deferred and recognized in net operating revenues when hedged transactions occur. Cash flows from derivatives accounted for as hedges are considered operating activities. The Company also uses exchange-traded natural gas futures contracts for speculative trading purposes. Realized and unrealized gains and losses on these contracts are recorded in other income in the period in which the changes occur. (9) GOODWILL: Goodwill consists of costs in excess of the net assets of businesses acquired. Goodwill is amortized on a straight-line basis over a period of twenty years. (10)STOCK OPTIONS: The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations in accounting for stock options. No compensation expense is recognized on stock options because the exercise price equals the market price of the underlying stock on the date of grant. Had compensation cost for the Company's stock option plans been determined based on the fair values at the grant dates as prescribed by Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," the effect on net income and earnings per share would not have been material. A. Summary of Significant Accounting Policies (Continued) (11)REVENUE RECOGNITION: Revenues for regulated gas sales to retail customers are recognized as service is rendered, including an accrual for unbilled revenues from the date of each meter reading to the end of the accounting period. Revenue is recognized for exploration and production activities when deliveries of natural gas, oil and natural gas liquids are made. Revenue from natural gas transportation and storage activities are recognized in the period service is provided. Revenues from energy marketing activities are recognized when deliveries occur. (12)USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. (13)CASH FLOWS: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. (14)RECLASSIFICATION: Certain amounts contained in prior year comparative information have been reclassified to conform with the 1996 presentation. B. Regulatory Assets and Liabilities The Company's distribution and interstate pipelines are subject to rate regulation by state and federal regulatory commissions. Accounting for these operations is in accordance with the provisions of Statement of Financial Accounting Standards No. 71 "Accounting for the Effects of Certain Types of Regulation". The Company records regulatory assets and liabilities to reflect future collections or payments through the regulatory process. The Company believes that it will continue to be subject to rate regulation that will provide for the recovery of deferred costs. Regulatory assets (liabilities) reflected in the consolidated balance sheets are as follows: December 31, 1996 1995 ------------------------ (Thousands) Deferred purchase gas costs.................... $ 60,729 $ 10,160 Unamortized loss on reacquired debt included in other assets................... 10,654 3,013 Regulatory assets: Deferred income tax accounting............. 64,132 76,122 Postretirement benefits other than pensions 4,062 3,909 Other...................................... 4,956 5,210 Estimated refunds due customers................ (14,889) (16,003) Deferred investment tax credits................ (19,892) (20,991) C. Impairment of Assets In 1995, the Company evaluated the carrying value of long-lived assets for impairment of value pursuant to the methodology prescribed in Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." Primarily as a result of the sustained decrease in gas and oil prices, the Company recognized a write-down in the carrying value of assets of $121.1 million which decreased net income by $74.2 million. The write-down included $95.1 million for exploration and production properties and intrastate transmission facilities included in the supply and logistics segment and $26.0 million for information systems, storage development projects, and other assets reflected in the utilities segment. The fair value of the assets was determined based upon expected discounted future net cash flows or a comparison with market values when available. D. 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 Equitable Gas Division has been subject to Pennsylvania Public Utility Commission (PUC) review. The PUC approved Equitable Gas Company's collection of $7.8 million in September 1996, $18.8 million in September 1995 and $7.8 million in September 1994 related to the direct billing settlement. The 1995 amount includes $11.0 million for accelerated collection of amounts that would have otherwise been subject to approval by the PUC, and recognized in income, in later years. As a result of the PUC approvals, net income for 1996 includes approximately $4.7 million, $11.3 million for 1995 and $4.7 million for 1994 related to the settlement. Approximately $10.2 million from the settlement remains to be recovered in future gas costs filings with the PUC over the next two years. In November 1995, Kentucky West Virginia Gas Company received $13.8 million from Columbia Gas Transmission Company (Columbia) as settlement, in Columbia's bankruptcy proceeding, of Kentucky West's claim for $19 million related to the direct billing settlements. Net income for 1995 includes $8.9 million related to the settlement. E. Columbia Gas Transmission Bankruptcy Settlement In addition to the direct billing settlement described above, the Company had various claims against Columbia for abrogation of contracts to purchase gas from the Company and collection of FERC Order 636 transition costs. In November 1995, the Company received $31.2 million in Columbia's bankruptcy settlement related to these items which increased net income for 1995 by $20.2 million. F. 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, ----------------------- 1996 1995 ----------------------- (Thousands) Deferred tax liabilities (assets): Exploration and development costs expensed for income tax reporting........ $ 63,435 $ 59,321 Tax depreciation in excess of book depreciation ....................... $ 251,951 257,642 Regulatory temporary differences........... 28,467 33,815 Deferred purchased gas cost................ 21,210 1,308 Alternative minimum tax.................... (72,470) (74,829) Investment tax credit...................... (7,997) (8,438) Other...................................... (4,887) (4,587) --------- --------- Total (including amounts classified as current liabilities of $19,009 for 1996 and current assets of $1,505 for 1995). $ 279,709 $ 264,232 ========= ========= As of December 31, 1996 and 1995, $64.1 million and $76.1 million, respectively, of the net deferred tax liabilities are related to rate-regulated operations and have been deferred as regulatory assets. Income tax expense (benefit) is summarized as follows: Years Ended December 31, ---------------------------------- 1996 1995 1994 ---------------------------------- (Thousands) Current: Federal........................ $ 3,953 $ 36,681 $11,196 State.......................... 538 8,360 2,640 Deferred: Federal........................ 22,905 (56,953) (6,848) State.......................... 3,186 (17,395) 1,789 -------- ---------- ------- Total........................ $ 30,582 $ (29,307) $ 8,777 ======== ========== ======= F. Income Taxes (Continued) Provisions for income taxes are less than amounts computed at the federal statutory rate of 35% on pretax income. The reasons for the difference are summarized as follows: Years Ended December 31, ----------------------------------- 1996 1995 1994 ----------------------------------- (Thousands) Tax at statutory rate........... $ 31,487 $ (9,716) $ 24,327 State income taxes.............. 1,913 (5,866) 3,069 Nonconventional fuels tax credit (1,299) (13,114) (16,442) Other........................... (1,519) (611) (2,177) -------- -------- -------- Income tax expense (benefit)... $ 30,582 $(29,307) $ 8,777 ======= ======== ======== Effective tax rate (benefit).... 34.0% (105.6)% 12.6% ==== ====== ==== The consolidated federal income tax liability of the Companies has been settled through 1994. The Company has available $72.5 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 $2.2 million which will expire in 2003. The net operating loss carryforwards apply to a subsidiary of Louisiana Intrastate Gas. Amortization of deferred investment tax credits amounted to $1.1 million for 1996, 1995 and 1994. G. 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. G. Employee Pension Benefits (Continued) The following table sets forth the plans' funded status and amounts recognized in the Company's consolidated balance sheets: December 31, ---------------------- 1996 1995 ---------------------- (Thousands) Actuarial present value of benefit obligations: Vested benefit obligation.................. $ 124,477 $ 127,758 ========== ========== Accumulated benefit obligation............. $ 130,416 $ 131,405 ========== ========== Market value of plan assets................. $ 165,360 $ 159,607 Projected benefit obligation................ 137,477 146,078 ---------- ---------- Excess of plan assets over projected benefit obligation......................... 27,883 13,529 Unrecognized net asset...................... (1,833) (2,208) Unrecognized net gain....................... (28,871) (20,194) Unrecognized prior service cost............. 11,124 9,864 ---------- ---------- Prepaid pension cost recognized in the consolidated balance sheets............ $ 8,303 $ 991 ========== ========== At year-end the discount rate used in determining the actuarial present value of benefit obligations was 7 3/4% for 1996, 7 1/2% for 1995 and 8 1/4% for 1994. The assumed rate of increase in compensation levels was 4 1/2% for all three years. The Companies' pension cost, using a 9% average rate of return on plan assets, comprised the following: Years Ended December 31, -------------------------------- 1996 1995 1994 -------------------------------- (Thousands) Service cost benefits earned during the period................ $ 4,053 $ 3,452 $ 3,916 Interest cost on projected benefit obligation....................... 11,197 11,165 10,752 Actual (return) loss on assets..... (26,828) (34,054) 2,757 Net amortization and deferral...... 12,756 19,806 (14,680) Gain on curtailment................ (7,370) - - --------- -------- -------- Net periodic pension (benefit) cost $ (6,192) $ 369 $ 2,745 ========= ======== ======== In 1996, the Company recognized a gain of $7.4 million for the curtailment of the defined benefit pension plan for certain non-utility employees. Net income for 1996 includes $4.4 million related to the curtailment. As of January 1, 1997, the Company established a defined contribution plan for these employees that will provide a base Company contribution. H. 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. In 1996, the Company implemented changes in the postretirement medical and life insurance benefits for all nonunion employees. Changes for represented employees are subject to collective bargaining. Benefits for employees in the supply and logistics and services segments were eliminated. For all other nonunion employees, the contributory portion of medical premiums to be paid by employees after retirement was changed to a graduated scale based on years of service and the maximum amount of non-contributory life insurance available at age 69 was reduced. The effect of these changes reduced the transition obligation by $29.7 million. The Company's transition obligation is being amortized through 2012. In determining the accumulated postretirement benefit obligation at December 31, 1996, the Company used a beginning inflation factor ranging from 6% to 8%, depending on the level of coverage, decreasing gradually to 4 1/4% to 4 3/4% after 4 to 8 years and a discount rate of 7 3/4%. At December 31, 1995, the beginning inflation factor was 10% decreasing gradually to 4 3/4% after 14 years and the discount rate was 7 1/2%. The following summarizes the status of the Company's accrued postretirement benefit costs (OPEBS): December 31, --------------------------- 1996 1995 --------------------------- (Thousands) Accumulated postretirement benefit obligation: Retired employees....................... $ 21,724 $ 31,555 Active employees: Fully eligible........................ 4,212 10,902 Other................................. 5,125 14,728 --------- --------- Total obligation .................... 31,061 57,185 Trust assets ............................. 4,623 2,632 --------- --------- Obligation in excess of trust assets...... 26,438 54,553 Unrecognized net loss..................... (10,808) (6,298) Unrecognized prior service cost .......... 2,923 - Unrecognized transition obligation........ (11,444) (39,195) --------- --------- Accrued postretirement benefit cost $ 7,109 $ 9,060 ========= ========= H. Other Postretirement Benefits (Continued) The net periodic cost for postretirement health care and life insurance benefits includes the following: Years Ended December 31, ------------------------------ 1996 1995 1994 ------------------------------ (Thousands) Service cost.......................... $ 746 $ 993 $ 1,049 Interest cost......................... 2,892 4,200 3,423 Amortization of transition obligation. 1,329 2,306 2,305 Expected return on assets............. (198) - - --------- -------- --------- Periodic cost....................... $ 4,769 $ 7,499 $ 6,777 ========= ======== ========= As of December 31, 1996 and 1995, approximately $4.0 million of the accrued OPEBS related to rate-regulated operations have been deferred as regulatory assets. Rate recovery has begun in several jurisdictions which requires the Company to place agreed upon amounts in trust when collected in rates until such time as they are applied to retiree benefits or returned to ratepayers. Trust assets consist principally of equity and debt securities. An increase of one percent in the assumed medical cost inflation rate would increase the accumulated postretirement benefit obligation by 9% and would increase the periodic cost by 7%. I. Common Stock (1) EMPLOYEE STOCK PURCHASE PLAN In October 1995, the Company implemented an Employee Stock Purchase Plan. The Plan provides for employees to purchase shares of the Company's common stock at a 10 percent discount through payroll deductions. (2) 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, 1996, 92,153 shares of common stock were reserved for issuance under the Plan. (3) STOCK REPURCHASE PROGRAM In 1995, the Board of Directors of the Company authorized the repurchase of up to one million shares of outstanding common stock. Through December 31, 1996, no shares have been repurchased. I. Common Stock (Continued) (4) COMMON STOCK RESERVE On July 18, 1996, the Board of Directors of the Company reserved 8,000,000 shares of the Company's authorized but unissued common stock for possible use in connection with future acquisitions. Through December 31, 1996, no shares have been issued. J. Stock-Based Compensation Plans (1) LONG-TERM INCENTIVE PLAN The Company's Long-Term Incentive Plan 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% 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. These options expire from 5 to 10 years from the date of grant but contain vesting provisions which are based upon Company performance. At December 31, 1996, 1,725,500 shares of common stock were reserved for issuance under the Plan. The following schedule summarizes the stock option activity: Years ended December 31, ------------------------------------- 1996 1995 1994 ------------------------------------- Options outstanding January 1....... 933,200 363,400 -- Granted............................. 125,400 739,000 363,400 Forfeited........................... (185,800) (169,200) -- -------- -------- ------- Options outstanding December 31..... 872,800 933,200 363,400 ======== ======== ======= At December 31: Number of options exercisable. 363,400 363,400 363,400 Prices of options outstanding. $27.50 $28.625 $33.81 to to $33.81 $33.81 Average option price.......... $30.08 $30.31 $33.81 J. Stock-Based Compensation Plans (Continued) (2) NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN The Company's Non-Employee Directors' Stock Incentive Plan 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. On the first business day of June in each year from 1997 to 1998, each Director will be granted an option for 500 additional shares of common stock. The exercise price for each share is 100% 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 at Director's retirement, disability, or death. No option may be exercised more than five years after date of grant. At December 31, 1996, 76,400 shares of common stock were reserved for issuance under the Plan. The following schedule summarizes the stock option activity: Years ended December 31, ----------------------------------- 1996 1995 1994 ----------------------------------- Options outstanding January 1.......... 11,000 4,000 -- Granted................................ 12,000 7,000 4,000 ------ ------ ----- Options outstanding December 31........ 23,000 11,000 4,000 ====== ====== ===== At December 31: Number of options exercisable..... None None None Prices of options outstanding..... $29.81 $29.875 $34.625 to to $34.625 $34.625 Average option price.............. $30.67 $31.60 $34.625 J. Stock-based Compensation Plans (Continued) (3) 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 restricting stock awards or options to purchase common stock of the Company at prices ranging from 75% to 100% of market value on the date of grant. All options are exercisable upon grant. No future grants may be made under the Plan which was replaced by the Long-Term Incentive Plan effective May 27, 1994 as described above. 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, ------------------------------------- 1996 1995 1994 ------------------------------------- Options outstanding January 1........ 144,125 241,818 253,068 Exercised............................ (43,425) (54,100) (7,650) Canceled, forfeited, surrendered or expired......................... (24,850) (43,593) (3,600) -------- -------- --------- Options outstanding December 31...... 75,850 144,125 241,818 ======== ======= ======= Price of options exercised during the year .......................... $20.13 $18.81 $17.50 to to $20.13 $20.13 Average price of options exercised during the year.................... $20.13 $20.01 $22.48 At December 31: Price of options outstanding....... $36.50 $20.13 $18.81 to to $36.50 $36.50 Average option price............... $36.50 $31.57 $29.82 Shares reserved for issuance....... 565,901 610,226 663,699 K. Short-Term Loans Maximum lines of credit available to the Company were $500 million during 1996 and 1995, and $325 million during 1994. 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. K. Short-Term Loans (Continued) At December 31, 1996, short-term loans consisted of $199.3 million of commercial paper and $5.6 million of bank loans at a weighted average annual interest rate of 5.44%; and at December 31, 1995, $135.0 million of commercial paper at a weighted average annual interest rate of 5.68%. The maximum amount of outstanding short-term loans was $295.5 million in 1996, $314.6 million in 1995 and $269.3 million in 1994. The average daily total of short-term loans outstanding was approximately $147.4 million during 1996, $214.2 million during 1995 and $204.6 million during 1994; weighted average annual interest rates applicable thereto were 5.5% in 1996, 6.0% in 1995 and 4.4% in 1994. L. Long-Term Debt On June 25, 1996, the Company commenced a tender offer for the purchase of all the outstanding 9.9% Debentures due April 15, 2013. As of December 31, 1996, $69.1 million of the $75 million Debentures were tendered for purchase leaving $5.9 million outstanding. Premiums paid for the redemption were $6.3 million. On June 28, 1996, the Company funded the retirement of $75 million of 8.25% Debentures due July 1, 1996. The Company filed a shelf registration with the Securities and Exchange Commission effective in June 1996 to issue $250 million of long-term debt. On July 29, 1996 the Company issued $150 million of 30-year Debentures with a coupon rate of 7.75%. The proceeds were used to finance the retirement of the 8.25% Debentures and purchase of 9.9% Debentures as described above. 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. As of December 31, 1996, $18 million of Series C Notes have been issued. The 9 1/2% Convertible Subordinated Debentures are convertible at any time into common stock at a conversion price of $11.06 per share. During 1996, 1995 and 1994, $178,000, $1,611,000 and $345,000 of these debentures were converted into 16,089 shares, 145,635 shares, and 31,187 shares of common stock, respectively. At December 31, 1996, 48,007 shares of common stock were reserved for conversions. Interest expense on long-term debt amounted to $34.8 million in 1996, $36.5 million in 1995, and $35.5 million in 1994. Aggregate maturities of long-term debt will be $0 in 1997, $5.0 million in 1998, $78.8 million in 1999, $2.1 million in 2000, and $14.0 million in 2001. M. Derivative Financial Instruments The Company is exposed to risk from fluctuations in energy prices in the normal course of business. The Company uses exchange-traded natural gas and crude oil futures contracts and options and over-the-counter (OTC) natural gas and crude oil swap agreements and options to hedge exposures to energy price changes, primarily relating to its gas marketing operations. The Company also trades in energy futures. Exchange-traded energy futures contracts are commitments to either purchase or sell a designated commodity, generally natural gas or crude oil, at a future date for a specified price. These instruments are generally settled with off-setting positions, but may be settled by delivery of commodities. OTC arrangements require settlement in cash. The exchange-traded contracts used by the Company cover one-month periods from one to eighteen months in the future. The OTC agreements cover one-month periods for up to five years in the future. Initial margin requirements are met in cash or other instruments, and changes in contract values are settled daily. Energy futures contracts have minimal credit risk because futures exchanges are the counterparties. The Company manages the credit risk of the other financial instruments by limiting dealings to those counterparties who meet the Company's criteria for credit and liquidity strength. The following table summarizes the outstanding derivative financial instruments: - - -------------------------------------------------------------------------------- Notional Unrealized Quantity Deferred Purchase Sale Gain/Loss (Bcf Equivalent) ($ Millions) - - -------------------------------------------------------------------------------- DECEMBER 31, 1996 Exchange traded Futures.................... 5.3 8.7 $ 1.7 ================================================================================ OTC Swaps...................... 45.0 91.2 $ (11.1) Options.................... 1.5 1.1 (1.5) - - -------------------------------------------------------------------------------- Total.................... 46.5 92.3 $ (12.6) ================================================================================ DECEMBER 31, 1995 Exchange traded Futures.................... 4.8 1.9 $ .4 Options.................... 18.2 11.4 (1.4) - - -------------------------------------------------------------------------------- Total.................... 23.0 13.3 $ (1.0) ================================================================================ OTC Swaps...................... 27.3 52.8 $ (.3) Options.................... 13.5 21.1 1.0 - - -------------------------------------------------------------------------------- Total.................... 40.8 73.9 $ .7 ================================================================================ M. Derivative Financial Instruments (Continued) Deferred realized gains (losses) from hedging firm commitments and anticipated transactions were $(.9) million and $(2.8) million at December 31, 1996 and 1995, respectively. These amounts are included in other current assets and recognized in earnings when the future transactions occur. At December 31, 1996 and 1995, there were no outstanding energy futures contracts held for trading purposes. During 1996 and 1995, the average fair value of traded contracts was $23,000 and ($40,000), respectively. Trading activity resulted in a net gain of $.8 million for 1996 and a net loss of $1.9 million for 1995. The value of these financial instruments is subject to fluctuations in market prices for natural gas. Exposure to this risk is managed by maintaining open positions within defined trading limits. N. 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, at December 31, 1996 and 1995 would be $445.6 million and $465.1 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 7 1/2% Debentures may not be redeemed prior to maturity. The 9.9% Debentures require payment of premiums for early redemption, exclusive of annual sinking fund requirements. The derivative financial instruments described in Note M are reflected in other current assets at fair value of $(.2) million and $(3.3) million at December 31, 1996 and 1995, respectively. O. Concentrations of Credit Risk Revenues and related accounts receivable from the supply and logistics segment's 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; the sale of produced natural gas liquids to a refinery customer in Kentucky; the sale of produced natural gas liquids and intrastate transportation of natural gas in Louisiana; and the marketing of natural gas and electricity. O. Concentrations of Credit Risk (Continued) The services segment's 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 cogeneration development, performance contracting, and water efficiency and program development to commercial, industrial, and institutional customers and various government facilities. The utilities segment's operating revenues and related accounts receivable are generated from state-regulated utility natural gas sales and transportation to more than 266,000 residential, commercial and industrial customers located in southwest Pennsylvania and parts of West Virginia and Kentucky; and 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. Under state regulations, the utility is required to provide continuous gas service to residential customers during the winter heating season. The Company is not aware of any significant credit risks which have not been recognized in provisions for doubtful accounts. P. Financial Information by Business Segment In 1996, the Company began reporting operations in three segments in order to more accurately reflect the Company's lines of business. The supply and logistics segment's activities comprise the exploration, development, production and sale of natural gas and oil, extraction and sale of natural gas liquids, intrastate transportation, contract drilling, nationwide natural gas marketing and supply, peak shaving, transportation arrangements, and electricity marketing. The services segment's activities comprise marketing of natural gas, cogeneration development, water efficiency and program development, performance contracting, and central facility plant operations. The utilities segment's activities comprise the operations of the Company's state-regulated local distribution company, in addition to gas transportation, gathering, storage and marketing activities involving the Company's three FERC-regulated gas pipelines. P. Financial Information by Business Segment (Continued) The following table sets forth financial information for each of the business segments: Years Ended December 31, -------------------------------------- 1996 1995 1994 -------------------------------------- (Thousands) OPERATING REVENUES: Supply and logistics............... $1,318,661 $1,059,854 $1,012,119 Utilities.......................... 507,441 441,732 446,786 Services........................... 172,335 473 - Sales between segments............. (136,638) (76,069) (61,625) ---------- ---------- ---------- Total............................ $1,861,799 $1,425,990 $1,397,280 ========== ========== ========== OPERATING INCOME (LOSS): Supply and logistics............... $ 52,010 $ (32,668) $ 34,932 Utilities.......................... 89,320 55,612 75,316 Services........................... (12,542) (992) - ---------- ---------- ---------- Total............................ $ 128,788 $ 21,952 $ 110,248 ========== ========== ========== IDENTIFIABLE ASSETS: Supply and logistics............... $1,089,669 $1,044,045 $1,120,311 Utilities.......................... 998,064 932,529 971,825 Services........................... 50,584 3,419 - Eliminations....................... (42,018) (16,680) (73,014) ---------- ----------- ----------- Total............................ $2,096,299 $1,963,313 $2,019,122 ========== ========== ========== DEPRECIATION AND DEPLETION: Supply and logistics............... $ 55,415 $ 78,444 $ 68,898 Utilities.......................... 26,608 26,181 24,449 Services........................... 358 - - ---------- ---------- ---------- Total............................ $ 82,381 $ 104,625 $ 93,347 ========== ========== ========== CAPITAL EXPENDITURES: Supply and logistics............... $ 72,617 $ 68,950 $ 100,225 Utilities.......................... 36,831 49,131 45,949 Services........................... 836 31 - ---------- ---------- ---------- Total............................ $ 110,284 $ 118,112 $ 146,174 ========== ========== ========== Q. Sale Of Property In October 1995, the Company sold most of its gas and oil properties in the northern Appalachian basin areas of New York, Pennsylvania and West Virginia. The properties comprised less than four percent of the supply and logistics segment's total gas and oil production and reserves. The Company previously operated the majority of these properties with its working interest averaging approximately 25 percent. Proceeds from the sale were approximately $17.3 million. R. Deferred Revenue In November 1995, the Company sold an interest in certain Appalachian gas properties, the production from which qualifies for nonconventional fuels tax credit. The Company retained an interest in the properties that will increase based on performance. As such, the proceeds of $133.5 million were recorded as deferred revenues and are being recognized in income as financial targets are met. S. Acquisitions In December 1996, the Company purchased all of the outstanding stock of Three Rivers Pipeline Corporation (Three Rivers) for $3.3 million. Three Rivers owns a 120-mile intrastate natural gas pipeline in central Pennsylvania. In September 1996, the Company purchased all of the outstanding stock of Pequod Associates, Inc. (Pequod) for $1.7 million. Pequod is an engineering consulting firm specializing in water efficiency and program development, energy efficiency studies, and technical training for water agency personnel. In March 1996, the Company acquired all of the outstanding stock of Conogen, Inc. (Conogen) in exchange for 239,316 shares of the Company's common stock valued at $7 million and subject to an additional contingent amount. The Company used shares held in treasury for this acquisition. Conogen is a design-builder and performance contractor in self-funded energy and resources efficiency projects for commercial, industrial, and institutional customers and various government facilities. The 1996 acquisitions were accounted for under the purchase method of accounting. Three Rivers is included in the utilities segment. Pequod and Conogen are included in the services segment. The effect of these acquisitions on the consolidated financial statements of the Company is not material. In July 1995, the Company acquired all of the outstanding stock of Independent Energy Corporation (IEC) in exchange for 232,564 shares of the Company's common stock held in treasury. IEC is engaged in the development, construction, operation and ownership of private power and cogeneration projects. The acquisition was accounted for as a pooling of interests. The effect on the Company's financial statements is not material. T. Commitments and Contingencies Rent expense was $10.9 million in 1996, $9.9 million in 1995 and $9.7 million in 1994. Long-term leases are for certain facilities and equipment and have renewal options ranging to 17 years from December 31, 1996. Future minimum rentals for all noncancelable long-term leases at December 31, 1996 are as follows: 1997, $7.2 million; 1998, $6.6 million; 1999, $5.5 million; 2000, $5.0 million; 2001, $5.3 million, and $25.1 million thereafter for a total of $54.7 million. The Company has annual commitments of approximately $35 million for demand charges under existing long-term contracts with pipeline suppliers for periods extending up to 16 years at December 31, 1996, 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. U. 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 volatility of oil and gas commodity prices: March June September December 31 30 30 31 ----------------------------------------------- (Thousands except per share amounts) 1996 Operating revenues $ 640,278 $ 391,767 $ 357,011 $ 472,743 Operating income 69,403 8,983 3,860 46,542 Net income (loss) 38,726 928 (3,687) 23,412 Earnings (loss) per share $1.11 $.03 $(.10) $.66 1995 Operating revenues $ 404,691 $ 316,534 $ 270,992 $ 433,773 Operating income (loss) 48,312 5,032 14,458 (45,850) Net income (loss) 27,754 (1,162) 1,684 (26,728) Earnings (loss) per share $.80 $(.03) $.05 $(.76) V. Natural Gas and Oil Producing Activities The supplementary information summarized below presents the results of natural gas and oil activities for the supply and logistics 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% of total Company proved reserves for the years presented. V. Natural Gas and Oil Producing Activities (Continued) (1) PRODUCTION COSTS The following table presents the costs incurred relating to natural gas and oil production activities: 1996 1995 1994 ------------------------------------- (Thousands) At December 31: Capitalized costs.............. $ 840,136 $803,124 $ 909,443 Accumulated depreciation and depletion................ 342,950 311,524 304,835 --------- ------- ------- Net capitalized costs........... $ 497,186 $ 491,600 $ 604,608 ========= ========= ========= Costs incurred : Property acquisition: Proved properties............ $ 68 $ 222 $ 8,335 Unproved properties.......... 6,411 - - Exploration.................... 17,934 14,844 22,783 Development.................... 33,298 31,802 60,690 (2) RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES The following table presents the results of operations related to natural gas and oil production, including the effect in 1995 of impairment of assets as described in Note C: 1996 1995 1994 ------------------------------------- (Thousands) Revenues: Affiliated..................... $ 50,968 $ 20,619 $ 16,564 Nonaffiliated ................. 89,096 114,247 136,029 Production costs................ 34,523 31,626 33,891 Exploration expenses............ 15,714 13,312 16,634 Depreciation and depletion...... 40,872 62,212 52,505 Impairment of assets............ - 65,563 - Income tax expense (benefit).... 18,062 (27,992) 3,602 --------- --------- --------- Results of operations from producing activities (excluding corporate overhead) $ 30,893 $ (9,855) $ 45,961 ========= ========= ========= V. Natural Gas and Oil Producing Activities (Continued) (3) RESERVE INFORMATION (UNAUDITED) The information presented below represents estimates of proved gas and oil reserves prepared by Company engineers. Proved developed reserves represent only those reserves expected to be recovered from existing wells and support equipment. Proved undeveloped reserves represent proved reserves expected to be recovered from new wells after substantial development costs are incurred. Substantially all reserves are located in the United States. NATURAL GAS 1996 1995 1994 ---------------------------------- (Millions of Cubic Feet) Proved developed and undeveloped reserves: Beginning of year....................... 845,771 874,964 822,583 Revision of previous estimates.......... 6,710 16,999 18,663 Purchase (sale) of natural gas in place - net 443 (31,729) 6,307 Extensions, discoveries and other additions............................ 53,901 50,521 89,918 Production.............................. (57,295) (64,984) (62,507) -------- -------- -------- End of year (a)......................... 849,530 845,771 874,964 ======== ======== ======== Proved developed reserves: Beginning of year....................... 739,249 771,635 759,282 End of year (b)......................... 732,158 739,249 771,635 (a) Includes proved reserves in Canada of 66,000 Mmcf in 1996, 70,000 MMcf in 1995 and 67,000 MMcf in 1994. (c) Includes proved developed reserves in Canada of 42,000 Mmcf in 1996, 46,000 MMcf in 1995, and 43,000 MMcf in 1994. V. Natural Gas and Oil Producing Activities (Continued) OIL 1996 1995 1994 --------------------------------- (Thousands of Barrels) Proved developed and undeveloped reserves: Beginning of year.................... 18,201 18,283 16,468 Revision of previous estimates....... 1,867 (356) 2,601 Sale of oil in place - net........... (168) (1,071) (169) Extensions, discoveries and other additions......................... 1,344 3,278 1,369 Production........................... (1,727) (1,933) (1,986) ------- ------ ------ End of year (a)...................... 19,517 18,201 18,283 ======= ====== ====== Proved developed reserves: Beginning of year.................... 16,834 18,110 16,442 End of year (b)...................... 18,482 16,834 18,110 (a) Includes proved reserves in Canada of 78,000 barrels in 1996, 91,000 barrels in 1995 and 75,000 barrels in 1994. (b) Includes proved developed reserves in Canada of 50,000 barrels in 1996, 64,000 barrels in 1995 and 50,000 barrels in 1994. V. Natural Gas and Oil Producing Activities (Continued) (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%. 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: 1996 1995 1994 ---------------------------------------- (Thousands) Future cash inflows................. $ 3,610,060 $ 2,279,509 $ 1,983,757 Future production costs............. (790,140) (635,540) (562,841) Future development costs............ (50,708) (51,081) (46,985) Future income tax expenses.......... (1,007,421) (539,106) (361,486) ------------ ----------- ----------- Future net cash flow................ 1,761,791 1,053,782 1,012,445 10% annual discount for estimated timing of cash flows.............. (877,077) (535,921) (471,778) ------------ ----------- ----------- Standardized measure of discounted future net cash flows (a)......... $ 884,714 $ 517,861 $ 540,667 ============ =========== =========== (a) Includes $23,074,000 in 1996, $11,293,000 in 1995 and $10,043,000 in 1994 related to Canada. Summary of changes in the standardized measure of discounted future net cash flows: 1996 1995 1994 ---------------------------------------- (Thousands) Sales and transfers of gas and oil produced - net............ $ (105,541) $ (103,240) $ (118,702) Net changes in prices, production and development costs............. 482,376 54,806 (135,742) Extensions, discoveries, and improved recovery, less related costs..................... 86,306 65,603 74,900 Development costs incurred.......... 13,543 18,620 16,037 Purchase (sale) of minerals in place - net....................... 1,506 (22,990) 9,627 Revisions of previous quantity estimates......................... 47,545 5,278 19,189 Accretion of discount............... 72,375 64,875 72,058 Net change in income taxes.......... (232,841) (97,808) 45,012 Other .............................. 1,584 (7,950) (9,192) ------------ ----------- ----------- Net increase (decrease)............. 366,853 (22,806) (26,813) Beginning of year................... 517,861 540,667 567,480 ------------ ----------- ----------- End of year......................... $ 884,714 $ 517,861 $ 540,667 ============ =========== =========== 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 23, 1997, which will be filed with the Commission within 120 days after the close of the Company's fiscal year ended December 31, 1996. 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 23, 1997. 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 23, 1997. 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 23, 1997. 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 (see below) 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 (see below) is filed as part of this annual report. 3. Exhibits The exhibits listed on the accompanying index to exhibits (pages 61 through 63) are filed as part of this annual report. (b) Reports on Form 8-K filed during the quarter ended December 31, 1996. 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, 1996 26 Statements of Consolidated Cash Flows for each of the three years in the period ended December 31, 1996 27 Consolidated Balance Sheets December 31, 1996 and 1995 28 & 29 Statements of Common Stockholders' Equity for each of the three years in the period ended December 31, 1996 30 Long-term Debt, December 31, 1996 and 1995 31 Notes to Consolidated Financial Statements 32 thru 55 2. Schedule for the Years Ended December 31, 1996, 1995 and 1994 included in Part IV: II - Valuation and Qualifying Accounts and Reserves 60 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, 1996 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) 1996 Accumulated Provision for Doubtful Accounts $10,539 $ 17,707 $17,532(A) $10,714 1995 Accumulated Provision for Doubtful Accounts $10,890 $ 10,810 $11,161(A) $10,539 1994 Accumulated Provision for Doubtful Accounts $10,106 $ 10,010 $ 9,226(A) $10,890 Note: (A) Customer accounts written off, less recoveries. INDEX TO EXHIBITS EXHIBITS DESCRIPTION METHOD OF FILING - - -------------- -------------------------------- =============================== 3.01 Restated Articles of Filed as Exhibit 3(i) to Form Incorporation of the Company 10-Q for the quarter ended dated May 27, 1996 (effective March 31, 1996 May 28, 1996) - - -------------- -------------------------------- =============================== 3.02 By-Laws of the Company Filed as Exhibit 3(ii) to (amended through March 21, Form 10-Q for the quarter 1996) ended March 31, 1996 - - -------------- -------------------------------- =============================== 4.01 (a) Indenture dated as of April 1, Filed as Exhibit 4.01 1983 between the Company and (Revised) to Post-Effective Pittsburgh National Bank Amendment No. 1 to relating to Debt Securities Registration Statement (Registration No. 2-80575) - - -------------- -------------------------------- =============================== 4.01 (b) Instrument appointing Bankers Filed as Exhibit 4.01 (b) to Trust Company as successor Form 10-K for the year ended trustee to Pittsburgh National December 31, 1993 Bank - - -------------- -------------------------------- =============================== 4.01 (d) Resolutions adopted June 22, Filed as Exhibit 4.01 (d) to 1987 by the Finance Committee Form 10-K for the year ended of the Board of Directors of December 31, 1993 the Company establishing the terms of the 75,000 units (debentures with warrants) issued July 1, 1987 - - -------------- -------------------------------- =============================== 4.01 (e) Resolution adopted April 6, Filed as Exhibit 4.01 (e) to 1988 by the Ad Hoc Finance Form 10-K for the year ended Committee of the Board of December 31, 1993 Directors of the Company establishing the terms and provisions of the 9.9% Debentures issued April 14, 1988 - - -------------- -------------------------------- =============================== 4.01 (f) Supplemental indenture dated Refiled herewith as Exhibit March 15, 1991 with Bankers 4.01(f) pursuant to Rule 24 Trust Company eliminating of SEC's Rules of Practice limitations on liens and additional funded debt - - -------------- -------------------------------- =============================== 4.01 (g) Resolution adopted August 19, Refiled herewith as Exhibit 1991 by the Ad Hoc Finance 4.01(g) pursuant to Rule 24 Committee of the Board of of the SEC's Rules of Practice Directors of the Company Addenda Nos. 1 thru 27, establishing the terms and provisions of the Series A Medium-Term Notes - - -------------- -------------------------------- =============================== 4.01 (h) Resolutions adopted July 6, Filed as Exhibit 4.05 to Form 1992 and February 19, 1993 by 10-K for the year ended the Ad Hoc Finance Committee December 31, 1992 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 - - -------------- -------------------------------- =============================== 4.01 (i) Resolution adopted July 14, Filed as Exhibit 4.01(i) to 1994 by the Ad Hoc Finance Form 10-K for the year ended Committee of the Board of December 31, 1995 Directors of the Company and Addenda Nos. 1 and 2, establishing the terms and provisions of the Series C Medium-Term Notes - - -------------- -------------------------------- =============================== - - -------------- -------------------------------- =============================== 4.01 (j) Resolution adopted January 18 Filed herewith as Exhibit and July 18, 1996 by the Board 4.01(j) of Directors of the Company and Resolutions adopted July 18, 1996 by the Executive Committee of the Board of Directors of the Company, establishing the terms and provisions of the 7.75% Debentures issued July 29, 1996 - - -------------- -------------------------------- =============================== *10.01 Equitable Resources, Inc. Key Filed as Exhibit 10.01 to Employee Restricted Stock Form 10-K for the year ended Option and Stock Appreciation December 31, 1994 Rights Incentive Compensation Plan (as amended through March 17, 1989) - - -------------- -------------------------------- =============================== *10.02 Employment Agreement dated as Filed as Exhibit 10.02 to of March 18, 1988 and restated Form 10-K for the year ended as of March 15, 1996, with December 31, 1995 Frederick H. Abrew - - -------------- -------------------------------- =============================== *10.04 (a) Agreement dated May 29, 1996 Filed herewith as Exhibit with Paul Christiano for 10.04 (a) deferred payment of 1996 director fees beginning May 29, 1996 - - -------------- -------------------------------- =============================== *10.04 (b) Agreement dated November 26, Filed herewith as Exhibit 1996 with Paul Christiano 10.04(b) for deferred payment of 1997 director fees - - -------------- -------------------------------- =============================== *10.05 Supplemental Executive Filed as Exhibit 10.05 to Retirement Plan (as amended Form 10-K for the year ended and restated through October December 31, 1995 20, 1995) - - -------------- -------------------------------- =============================== *10.06 Retirement Program for the Filed as Exhibit 10.06 to Board of Directors of Form 10-K for the year ended Equitable Resources, Inc. (as December 31, 1994 amended through August 1, 1989) - - -------------- -------------------------------- =============================== *10.07 Supplemental Pension Plan (as Filed as Exhibit 10.07 to amended and restated through Form 10-K for the year ended December 16, 1994) December 31, 1994 - - -------------- -------------------------------- =============================== *10.08 Policy to Grant Supplemental Filed as Exhibit 10.08 to Deferred Compensation Benefits Form 10-K for the year ended in Selected Instances to a December 31, 1994 Select Group of Management or Highly Compensated Employees (as amended and restated through August 1, 1989) - - -------------- -------------------------------- =============================== *10.09 Equitable Resources, Inc. and Filed herewith as Exhibit Subsidiaries Short-Term 10.09 Incentive Compensation Plan as amended March 1997 - - -------------- -------------------------------- =============================== *10.10 (a) Agreement dated December 31, Filed as Exhibit 10.10 (a) to 1987 with Malcolm M. Prine for Form 10-K for the year ended deferred payment of 1988 December 31, 1993 director fees - - -------------- -------------------------------- =============================== *10.10 (b) Agreement dated December 30, Filed as Exhibit 10.10 (b) to 1988 with Malcolm M. Prine for Form 10-K for the year ended deferred payment of 1989 December 31, 1993 director fees - - -------------- -------------------------------- =============================== - - -------------- -------------------------------- =============================== 10.11 Trust Agreement with Filed as Exhibit 10.12 to Pittsburgh National Bank to Form 10-K for the year ended act as Trustee for December 31, 1994 Supplemental Pension Plan, Supplemental Deferred Compensation Benefits, Retirement Program for Board of Directors, and Supplemental Executive Retirement Plan - - -------------- -------------------------------- =============================== *10.12 Equitable Resources, Inc. Filed as Exhibit 10.13 to Non-Employee Directors' Stock Form 10-K for the year ended Incentive Plan December 31, 1994 - - -------------- -------------------------------- =============================== *10.13 Equitable Resources, Inc. Filed as Exhibit 10.14 to Long-Term Incentive Plan Form 10-K for the year ended December 31, 1994 - - -------------- -------------------------------- =============================== *10.14 (a) Agreement dated May 24, 1996 Filed herewith as Exhibit with Phyllis A. Savill for 10.14(a) deferred payment of 1996 director fees beginning May 24, 1996 - - -------------- -------------------------------- =============================== *10.14 (b) Agreement dated November 27, Filed herewith as Exhibit 1996 with Phyllis A. Savill 10.14 (b) for deferred payment of 1997 director fees - - -------------- -------------------------------- =============================== *10.15 Change in Control Agreement Filed as Exhibit 10.15 to the executed with certain key Form 10-K for the year ended employees December 31, 1995 - - -------------- -------------------------------- =============================== *10.16 Equitable Resources, Inc. and Filed as Exhibit 10.16 to the Subsidiaries Deferred Form 10-K for the year ended Compensation Plan December 31, 1995 - - -------------- -------------------------------- =============================== 11.01 Statement re Computation of Filed herewith as Exhibit Earnings Per Share 11.01 - - -------------- -------------------------------- =============================== 21 Schedule of Subsidiaries Filed herewith as Exhibit 21 - - -------------- -------------------------------- =============================== 23.01 Consent of Independent Auditors Filed herewith as Exhibit 23.01 - - -------------- -------------------------------- =============================== 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. By: EQUITABLE RESOURCES, INC. ------------------------------------- (Registrant) By: /s/ Frederick H. Abrew ------------------------------------- Frederick H. Abrew President and Chief Executive Officer Date: March 20, 1997 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 20, 1997 - - ----------------------------- Frederick H. Abrew Senior Vice President and /s/ A. Mark Abramovic Chief Financial Officer March 20, 1997 - - ----------------------------- A. Mark Abramovic /s/ Paul Christiano Director March 20, 1997 Paul Christiano /s/ E. Lawrence Keyes, Jr. Director March 20, 1997 - - ----------------------------- E. Lawrence Keyes, Jr. /s/ Thomas A. McConomy Director March 20, 1997 - - ----------------------------- Thomas A. McConomy /s/ Donald I. Moritz Director March 20, 1997 - - ----------------------------- Donald I. Moritz /s/ Malcolm M. Prine Director March 20, 1997 - - ----------------------------- Malcolm M. Prine SIGNATURES (Continued) /s/ James E. Rohr Director March 20, 1997 - - ----------------------------- James E. Rohr /s/ Phyllis A. Savill Director March 20, 1997 - - ----------------------------- Phyllis A. Savill /s/ David S. Shapira Director March 20, 1997 - - ----------------------------- David S. Shapira /s/ J. Michael Talbert Director March 20, 1997 - - ----------------------------- J. Michael Talbert EX-4.01F 2 SUPPLEMENTAL INDENTURE WITH BANKERS TRUST Exhibit 4.01 (f) 1991 SUPPLEMENTAL INDENTURE This 1991 Supplemental Indenture, made as of March 15, 1991, by and between EQUITABLE RESOURCES, INC. (formerly Equitable Gas Company), a Pennsylvania corporation having its principal office at 420 Boulevard of the Allies, Pittsburgh, Pennsylvania 15219 (the "Company"), and BANKERS TRUST COMPANY, a New York corporation having its principal office at Four Albany Street, New York, New York 10006, as successor trustee (the "Trustee") under the Indenture dated as of April 1, 1983 (the "Indenture") from the Company, WITNESSETH THAT: WHEREAS, Section 901(5) of the Indenture provides that, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee may enter into a supplemental indenture for the purpose, among others, of changing or eliminating any of the provisions of the Indenture, provided that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; WHEREAS, four series of Securities have been created prior to the execution hereof, three of which series, to wit: the Debentures, 8 1/4% Series Due July 1, 1996, the Debentures, 7 1/2% Series Due July 1, 1999, and the Debentures, 9.90% Series Due April 15, 2013, remain Outstanding in varying principal amounts and are entitled to the benefit of the provisions of the Indenture eliminated hereby; WHEREAS, the execution and delivery of this 1991 Supplemental Indenture have been duly authorized by a Board Resolution. NOW, THEREFORE, the parties hereto, for and in consideration of the premises, and intending to be legally bound hereby, do hereby agree to eliminate from the Indenture, in their entirety, Section 1004, containing a limitation on liens, and Section 1005, containing a limitation upon additional funded debt, provided that the elimination of each of these provisions shall become effective only when there is no Security Outstanding of any series created prior to the execution of this Supplemental Indenture which is entitled to the benefit of such provisions. After the elimination of the above-mentioned provisions becomes effective, all references to such provisions contained elsewhere in the Indenture shall be deemed also to have been eliminated and given no effect. This instrument is and for all purposes shall be considered supplemental to the Indenture which, as heretofore supplemented and as supplemented hereby, shall remain in full force and effect. Terms capitalized herein and defined in the Indenture are used herein as therein defined. The Trustee does hereby approve the form of this 1991 Supplemental Indenture. WITNESS the due execution hereof as of the day and year first above written. EQUITABLE RESOURCES, INC. By ------------------------------- Vice President and Treasurer [Corporate Seal] ATTEST: Corporate Secretary BANKERS TRUST COMPANY, as Trustee By Title [Corporate Seal] ATTEST: Authorized Officer COMMONWEALTH OF PENNSYLVANIA ) ) ss: COUNTY OF ALLEGHENY ) On this _________ day of ______________________, 1991, before me, the undersigned officer, personally appeared _________________________, who acknowledged himself to be Vice President and Treasurer of Equitable Resources, Inc., a corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set me hand and official seal. Notary Public My Commission expires: COMMONWEALTH OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) On this _________ day of ______________________, 1991, before me, the undersigned officer, personally appeared _________________________, who acknowledged himself to be A _______________________ of Bankers Trust Company, a corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set me hand and official seal. Notary Public My Commission expires: EX-4.01G 3 RESOLUTION--TERMS OF SERIES A MEDIUM-TERM NOTES Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. Ad Hoc Finance Committee Meeting Pittsburgh, Pa. August 19, 1991 In accordance with notice duly given, a telephonic meeting of the Ad Hoc Finance Committee of the Board of Directors of Equitable Resources, Inc., was held on Monday, August 19, 1991, at 2:30 p.m., Eastern Daylight Time. Committee members participating: Messrs. Merle E. Gilliand, E. Lawrence Keyes, Jr., Donald I. Moritz and Malcolm M. Prine. Also present: Messrs. Frederick H. Abrew, Executive Vice President; Robert E. Daley, Vice President and Treasurer; Elliot Gill, Senior Securities Attorney; and Ms. Audrey C. Moeller, Vice President and Corporate Secretary. Mr. Donald I. Moritz, President and Chief Executive Officer, acted as Chairman of the meeting and Ms. Audrey C. Moeller acted as Secretary of the meeting. The Chairman stated that the purpose of the meeting was to adopt a resolution establishing certain terms and provisions of-the fifth series of securities of the Company to be issued under the Indenture dated as of April 1, 1983 from Equitable Resources, Inc., to Bankers Trust Company, as Successor Trustee, and to authorize the Vice President and Treasurer of the Company to take certain other action on the Committee's behalf as previously authorized by the Board of Directors. Mr. Moritz asked the Committee if they received the draft of the resolution to be adopted and all acknowledged that they received and reviewed it. The Chairman stated that several changes had been made in the text of the resolution which would be discussed after a review by Mr. Daley of the reasons for the Medium-Term Note program and how it will operate. Mr. Daley then briefly reviewed the text of the resolution pointing out that the Notes would be issued from time to time and designated Medium-Term Notes, Series A. He said maturities shall be three to 30 years from the date of issue; that the Notes may be redeemed prior to maturity; shall not be convertible; that the Company has no obligation to repay the Notes prior to maturity; and that he would be negotiating with Agents, Morgan Stanley, Lehman Brothers and The First Boston Corporation in fixing the interest rate on each issue of Notes. Mr. Daley referred the Committee to a resolution adopted by said Committee on July 19, 1991, which restricted him from negotiating an interest rate higher than 9-1/2% per annum. The Chairman noted that it was necessary to adopt the resolution for a Closing which will take place this week so that when a determination is made by Mr. Daley to issue Notes all documents will be in order. The Chairman asked Mr. Gill to review the changes made in the text of the resolution from the copy reviewed by the Committee. Mr. Gill noted two changes: (1) counsel for the Trustee had requested an indemnification provision; and (2) a provision was added clarifying references in the Indenture that all Notes issued under any series will be treated equally. After full discussion, on motion duly made and seconded, the following resolutions were unanimously adopted: RESOLVED, That, in accordance with Section 301 of the Indenture dated as of April 1, 1983 (the "Original Indenture") from Equitable Resources, Inc. (the "Company") to Bankers Trust Company, as trustee (the "Trustee"), as amended by the 1991 Supplemental Indenture dated as of March 15, 1991 (the Original Indenture as so amended, the "Indenture"), there is hereby established for authentication and delivery by the Trustee an additional series of Securities of the Company (such series being referred to herein as the "Notes") to be issued from time to time under the Indenture, having the following terms and provisions in addition to the terms and provisions established by the Indenture: 1. TITLE. The title of the Notes shall be "Medium-Term Notes, Series A". 2. PRINCIPAL AMOUNT. The aggregate principal amount of Notes which may be authenticated and delivered (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 304, 305, 306, 906 or 1107 of the Indenture) shall be limited to $100,000,000. Notes may be issued at any time or from time to time in such principal amounts as shall be specified in one or more Addenda hereto (individually an "Addendum" and collectively "Addenda") which may be executed at any time or from time to time by the President, the Executive Vice President or the Vice President and Treasurer of the Company. Each Addendum shall be deemed to have been, and hereby is, adopted by this Committee, and may be certified by the Secretary or Assistant Secretary of the Company as a part of this Board Resolution. For purposes of each issue of Notes established pursuant to any Addendum, all references in Sections 304, 305, 306, 906 and 1107 of the Indenture to the Securities of any "series" shall be deemed to be references solely to the Notes so established and to any other Notes having the same interest rate, Maturity Date, Interest Payment Dates, Record Dates, redemption provisions and other relevant terms. 3. MATURITY. The principal of the Notes shall be payable on such date as shall be three to 30 years from the date of issue, as shall be specified in any applicable Addendum. 4.1 INTEREST RATE. The Notes shall bear interest at such fixed rate per annum as shall be specified in any applicable Addendum, in each case until the principal thereof is paid or made available for payment and (to the extent that the payment of such interest shall be legally enforceable) at the same rate per annum on any overdue principal and premium and on any overdue installment of interest. 4.2 INTEREST ACCRUAL. Interest on the Notes shall accrue from the date of the original issue of such Notes or from the most recent Interest Payment Date (as specified in section 4.3 below) to which interest has been paid or duly provided for. 4.3 INTEREST PAYMENT DATES. Unless otherwise specified in any applicable Addendum, the Interest Payment Dates on which interest on the Notes shall be paid or duly provided for shall be semiannually on February 1 and August 1 in each year, commencing on such date as shall be specified in any applicable, Addendum. 4.4 Regular Record Dates. Unless otherwise specified in any applicable Addendum. the Regular Record Dates for the interest on the Notes so payable on any Interest Payment Date (as specified in Section 4.3 above) shall be the January 15 or July 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. 5. PLACE OF PAYMENT. Principal of, and premium, if any, on, and interest payable upon maturity or earlier redemption of, the Notes shall be payable at the office or agency of the company maintained for that purpose in the Borough of Manhattan, the City of New York, New York (the "Paying Agent"). Interest on the Notes, other than interest payable at maturity or earlier redemption, shall be payable by check mailed to the registered address of the holder of record on the Regular Record Date for such interest payment. Unless otherwise designated by the company in a written notice to the Trustee, the office or agency in the Borough of Manhattan for the above purpose shall be the Corporate Trust Office of the Trustee. Notwithstanding the foregoing, (a) interest on any Note held in the name of a nominee of the Depository (as defined in Section 13.2 below) shall be payable by wire transfer of immediately available funds and (b) interest on any Certificated Note (as defined in Section 13.2 below) held by a holder of $10,000,000 or more in aggregate principal amount of Certificated Notes having the same Interest Payment Dates shall be entitled to receive payments of interest by wire transfer of immediately available funds upon written request to the Paying Agent not later than 15 calendar days prior to the applicable Interest Payment Date. 6. REDEMPTION. The Notes may be subject to redemption prior to Maturity at the option of the Company, as a whole at any time or in part from time to time, otherwise than through operation of a sinking fund, at such Redemption Prices (expressed as percentages of the principal amount) prevailing during such periods of time as shall be specified in any applicable Addendum, in each case together with accrued interest to the Redemption Date. 7. SINKING FUND. The Notes may be entitled to the benefit of a sinking fund requiring payments by the Company to the Trustee at such times, in amounts sufficient to redeem such principal amount of the Notes at such sinking fund redemption price, with such right of the Company to increase such payments or to deliver Notes or to apply Notes previously delivered in satisfaction of such sinking fund requirements, and with such credit to the Company for previously increased sinking fund payments, in each case as shall be specified in any applicable Addendum. 8. DENOMINATIONS. Unless otherwise specified in any applicable Addendum, the Notes shall be issuable in denominations of $100,000 or any amount in excess thereof which is an integral multiple of $1,000. 9. CONVERTIBILITY. The Notes shall not be convertible into shares of capital stock or other securities of the Company. 10. REPAYMENT. Except as provided in Sections 7 and 11 hereof, the Company shall have no obligation to repay the Notes (at the option of Holders or otherwise) prior to the Maturity of the Notes (as specified in Section 3 above). 11. ACCELERATION. The entire principal amount of the Notes (and not a portion thereof) shall be payable upon declaration of acceleration of the Maturity of any Note pursuant to Section 502 of the Indenture. 12. SECTION 403 OF INDENTURE. Section 403 of the Indenture shall apply to the Notes. 13.1 ADDITIONAL COVENANTS. No additional covenants shall be applicable in respect of the Notes. 13.2 NOTES ISSUABLE AS GLOBAL SECURITIES. Each Note will be represented either by a Global Note registered in the name of a nominee of The Depository Trust Company, as Depository (a "Book-Entry Note"), or by a certificate issued in definitive or temporary form (a "Certified Note"), as specified in the applicable Addendum. Each Global Note representing Book-Entry Notes will be deposited with The Depository Trust Company, New York, New York (the "Depository"), and registered in the name of a nominee of the Depository. Certificated Notes will not be exchangeable for Book-Entry Notes and, except under the circumstances described below, Book-Entry Notes will not be exchangeable for Certificated Notes and will not otherwise be issuable as Certificated Notes. So long as the Depository's nominee is the registered owner of a Global Note, such nominee will be considered to be the sole owner or Holder of the Notes represented by such Global Note for all purposes of the Indenture. Except as set forth below, owners of beneficial interests in a Global Note will not be entitled to have the Notes represented by, such Global Note registered in their names, will not receive or be entitled to receive physical delivery of such Notes in definitive form, and will not be considered to be the owners or Holders thereof under the Indenture. If the Depository is at any time unwilling or unable to continue to act as Depository, and a successor depository is not appointed by the Company within 90 days, the Company will issue Certificated Notes in definitive form in exchange for the Global Note or Notes previously deposited with the Depository. In addition, the Company may at any time in its sole discretion determine not to have the Notes represented by one or more Global Notes and, in such event, will issue Certificated Notes in definitive form in exchange for such Global Note or Notes. 13.3 OTHER PROVISIONS. The Notes shall have no other terms than as set forth in this Board Resolution (including any Addenda) and the Indenture or as may be set forth in any indenture or indentures supplemental to the Indenture. 13.4 INDEMNIFICATION. The Company agrees to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the duties set forth in those certain Administrative Procedures, which comprise a part of that certain Distribution Agreement, to be dated on or about August 20, 1991, between the Company and the Agents named therein (the "Administrative Procedures"), relating to the Notes, as though such Administrative Procedures were set forth in the Indenture. Capitalized terms used in this Board Resolution have the meanings set forth in the Indenture unless otherwise indicated or the context otherwise requires. The meeting adjourned at 2:45 p.m. s/ Audrey C. Moeller -------------------- Secretary Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 1 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. September 1, 2021. 3.1. Interest Rate. 9% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 88 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 29th day of August, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 2 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $2,000,000. 2. Maturity Date. September 1, 2021. 3.1. Interest Rate. 8.99% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 88 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 3rd day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 3 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. September 1, 2003. 3.1. Interest Rate. 8.55% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 75 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 6th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 4 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $2,000,000. 2. Maturity Date. September 1, 2003. 3.1. Interest Rate. 8.55% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 73 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 6th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 5 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $6,000,000. 2. Maturity Date. September 1, 2003. 3.1. Interest Rate. 8.52% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 74 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 6th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 6-A TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, That, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the Company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. September 1, 2003. 3.1. Interest Rate. 8.55% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Resolved Further, That Addendum No. 3 hereby is rescinded and replaced by this Addendum No. 6-A. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the Orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, It is noted that the interest rate set forth above represents a premium of 75 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 6th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 6-B TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, That, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the Company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $2,000,000. 2. Maturity Date. September 1, 2003. 3.1. Interest Rate. 8.55% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Resolved Further, That Addendum No. 4 hereby is rescinded and replaced by this Addendum No. 6-B. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the Orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, It is noted that the interest rate set forth above represents a premium of 73 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 6th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 7 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $1,000,000. 2. Maturity Date. September 20, 2006. 3.1. Interest Rate. 8.50% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 77 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 10th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 8 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $2,000,000. 2. Maturity Date. September 1, 2009. 3.1. Interest Rate. 8.82% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 82 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 10th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 9 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $2,000,000. 2. Maturity Date. September 18, 2006. 3.1. Interest Rate. 8.50% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 77 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 10th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 10 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $3,000,000. 2. Maturity Date. September 20, 2006. 3.1. Interest Rate. 8.44% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 78 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 13th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 11 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. September 1, 2021. 3.1. Interest Rate. 9.00% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 104 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 13th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 12 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $10,000,000. 2. Maturity Date. September 1, 2021. 3.1. Interest Rate. 8.98% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 104 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 16th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 13 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $7,000,000. 2. Maturity Date. October 1, 2021. 3.1. Interest Rate. 8.93% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 100 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 16th day of September, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 14 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $1,000,000. 2. Maturity Date. November 1, 2001. 3.1. Interest Rate. 8.19% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 73 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 2nd day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 15A TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. October 1, 2020. 3.1. Interest Rate. 8.88% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 105 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 2nd day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 15B TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $3,000,000. 2. Maturity Date. October 1, 2020. 3.1. Interest Rate. 8.88% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 103 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 2nd day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 16 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $1,000,000. 2. Maturity Date. October 10, 2001. 3.1. Interest Rate. 8.17% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 70 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 2nd day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 17 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $1,000,000. 2. Maturity Date. November 1, 2011. 3.1. Interest Rate. 8.79% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 94 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 3rd day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 18 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $1,000,000. 2. Maturity Date. November 1, 2001. 3.1. Interest Rate. 8.16% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 73 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 4th day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 19 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $3,200,000. 2. Maturity Date. October 1, 2020. 3.1. Interest Rate. 8.81% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 100 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 8th day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 20 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. November 1, 2001. 3.1. Interest Rate. 8.14% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 73 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 8th day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 21 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. October 1, 2009. 3.1. Interest Rate. 8.72% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 89 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 8th day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 22 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $2,300,000. 2. Maturity Date. October 1, 2009. 3.1. Interest Rate. 8.75% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 87 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 9th day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 23 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $1,500,000. 2. Maturity Date. November 1, 2006. 3.1. Interest Rate. 8.29% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 70 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 10th day of October, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 24 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. December 1, 2014. 3.1. Interest Rate. 8.70% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 90 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 12th day of November, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 25 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $6,000,000. 2. Maturity Date. December 3, 2001. 3.1. Interest Rate. 8.05% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 70 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 12th day of November, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 26 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. January 15, 1998. 3.1. Interest Rate. 7.24% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 60 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 3rd day of December, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer Exhibit 4.01 (g) EQUITABLE RESOURCES, INC. ADDENDUM NO. 27 TO BOARD RESOLUTION Establishing Certain Terms and Provisions of an Issue of Medium-Term Notes, Series A Pursuant to the Board Resolution Adopted August 19, 1991 RESOLVED, that, as contemplated by the Board Resolution adopted August 19, 1991, there is hereby established for authentication and delivery by the Trustee an issue of the Medium-Term Notes, Series A of the company having the following terms and provisions in addition to the terms and provisions established by the Indenture and the aforesaid Board Resolution: 1. Principal Amount. $5,000,000. 2. Maturity Date. December 27, 2011. 3.1. Interest Rate. 8.48% per annum. 3.2. Interest Payment Dates. February 1 and August 1, commencing February 1, 1992. 4. Notes Issuable as Global Securities. The Notes of this issue shall be issuable only as Global Notes, except under the circumstances described in the Board Resolution. 5. Price to the Public. 100%. Capitalized terms used in this Addendum to Board Resolution have the meanings set forth in the Board Resolution unless otherwise indicated or the context otherwise requires. In response to certain provisions of the orders of the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, it is noted that the interest rate set forth above represents a premium of 75 basis points over the corresponding Treasury rate. WITNESS the due execution hereof this 19th day of December, 1991. s/ Robert E. Daley -------------------------- Vice President & Treasurer EX-4.01J 4 RESOLUTION-TERMS OF 7.75% DEBENTURES Exhibit 4.01 (j) RESOLUTION ADOPTED ON JULY 18, 1996 BY THE EXECUTIVE COMMITTEE, A DULY AUTHORIZED COMMITTEE APPOINTED BY THE BOARD OF DIRECTORS, ESTABLISHING CERTAIN TERMS AND PROVISIONS OF THE FIRST SERIES OF SECURITIES TO BE ISSUED UNDER THE INDENTURE DATED AS OF JULY 1, 1996 FROM EQUITABLE RESOURCES, INC. TO THE BANK OF MONTREAL TRUST COMPANY, AS TRUSTEE RESOLVED, That, in accordance with Section 301 of the Indenture dated as of July 1, 1996 (the "Indenture") from Equitable Resources, Inc. (the "Company") to the Bank of Montreal Trust Company, as trustee (the "Trustee"), there is hereby established for authentication and delivery by the Trustee the first series of Securities (such series being referred to herein as the "Debentures") of the Company to be issued under the Indenture, having the following terms and provisions in addition to the terms and provisions established by the Indenture: 1.1 TITLE. The title of the Debentures shall be "Debentures, 7 3/4% Series due July 15, 2026." 2.1 PRINCIPAL AMOUNT. The aggregate principal amount of the Debentures which may be authenticated and delivered under the Indenture shall be limited to $150,000,000. 3.1 MATURITY. The principal of the Debentures shall be payable on July 15, 2026. 4.1 INTEREST RATE. The Debentures shall bear interest at the rate of 7 3/4% per annum until the principal thereof is paid or made available for payment and (to the extent that the payment of such interest shall be legally enforceable) at the same rate per annum on any overdue principal and premium and on any overdue installment of interest. 4.2 INTEREST ACCRUAL. Interest on the Debentures shall accrue from the date of the original issue of any of the Debentures or from the most recent Interest Payment Date (as specified in Section 4.3 below) to which interest has been paid or duly provided for. 4.3 INTEREST PAYMENT DATES. The Interest Payment Dates on which interest on the Debentures shall be paid or duly provided for shall be semiannually on January 15 and July 15 in each year, commencing January 15, 1997. 4.4 REGULAR RECORD DATES. The Regular Record Dates for the interest on the Debentures so payable on any Interest Payment Date (as specified in Section 4.3 above) shall be the June 30 or December 31 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. 5.1 PLACE OF PAYMENT. Principal of (and premium, if any, on) the Debentures shall be payable at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, New York. Unless otherwise designated by the Company in a written notice to the Trustee, such office or agency in the Borough of Manhattan for the above purpose shall be the Corporate Trust Office of the Trustee. Interest on the Debentures shall be payable by check mailed to the registered address of the holder of record on the Regular Record Date for such interest payment. 6.1 REDEMPTION. The Debentures are nonredeemable prior to maturity. 7.1 SINKING FUND. There will be no sinking fund for the Debentures. 8.1 DENOMINATIONS. As contemplated by the Indenture, the Debentures shall be issuable in denominations of $1,000 and any integral multiple thereof. 9.1 CONVERTIBILITY. The Debentures shall not be convertible into shares of capital stock or other securities of the Company. 10.1 REPAYMENT. Except as provided in Section 11.1 hereof, the Company shall have no obligation to repay the Debentures (at the option of Holders or otherwise) prior to the Maturity of the Debentures (as specified in Section 3.1 above). 11.1 ACCELERATION. The principal amount of the Debentures (and not a portion thereof) shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502 of the Indenture. 12.1 SECTION 1301 OF INDENTURE. Section 1301 of the Indenture shall apply to the Debentures. 13.1 OTHER PROVISIONS. The Debentures shall have no other terms than as set forth in this Board Resolution and the Indenture or as may be set forth in any indenture or indentures supplemental to the Indenture. Capitalized terms used in this Board Resolution have the meanings set forth in the Indenture unless otherwise indicated or the context indicates otherwise. Exhibit 4.01 (j) EXCERPT FROM THE MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF EQUITABLE RESOURCES, INC. HELD JANUARY 17-18, 1996 The Chairman asked the Board to authorize the filing of the Registration Statement and to adopt resolutions authorizing all other action required in connection therewith. After full discussion, on motion duly made and seconded, the following resolutions were unanimously adopted: RESOLVED, That this Board hereby authorizes and approves a financing program involving the issue and sale from time to time by the Company of up to $250 million aggregate principal amount of debt securities to be issued under the Indenture dated as of April 1, 1983 (the "Indenture"), as supplemented, between the Company and Bankers Trust Company, as Trustee. RESOLVED FURTHER, That the President and the Vice President and Chief Financial Officer and other proper officers of the Company be, and hereby they are, authorized, empowered and directed for and on behalf of the Company to cause a Registration Statement on Form S-3 pertaining to the issuance and sale of the debt securities, in such form as such officers may approve, their approval to be evidenced conclusively by their execution of the same, to be executed and filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended. RESOLVED FURTHER, That the Vice President and Chief Financial Officer of the Company, be, and hereby he is, designated to act on behalf of the Company as its agent for service in respect of matters concerning such Registration Statement, with the powers enumerated in Rule 478 of the Rules and Regulations of the Securities and Exchange Commission under the Securities Act of 1933, as amended. RESOLVED FURTHER, That the proper officers of the Company be, and hereby they are, authorized, empowered and directed for and on behalf of the Company to prepare or cause to be prepared and executed under the corporate seal of the Company if necessary or advisable, and to cause to be filed at any time and from time to time, any and all amendments to said Registration Statement, including post-effective amendments, and other documents to be filed with the Securities and Exchange Commission as they may deem necessary or advisable, such amendments and other documents to be in such form as the officers executing the same may approve, their approval to be evidenced conclusively by such execution, and to take any and all further action and to file such prospectus and any supplements thereto and other documents with the Securities and Exchange Commission as they may deem necessary or advisable, in order to make such filing effective and to effectuate the issuance and sale from time to time of debt securities; and the execution by such officers of any such paper or document or the doing by any of them of any acts in connection with the foregoing matters shall conclusively establish their authority therefor from the Company and the approval and ratification by the Company of the papers and documents so executed and the actions so taken. RESOLVED FURTHER, That the proper officers of the Company be, and hereby they are, authorized, empowered and directed to execute and file on behalf of the Company a Securities Certificate with the Pennsylvania Public Utility Commission and an Application for an Order Authorizing the Issuance and Sale of Debt Securities with the Kentucky Public Service Commission, in each case relating to the debt securities, and to execute and file with the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission and all other regulatory authorities such amendments or additional applications, agreements and other documents, or amendments to the same, and to take any and all such further actions, as such officers may deem necessary or advisable in order to make all filings with all such regulatory authorities effective and to authorize the issuance and sale of the debt securities. RESOLVED FURTHER, That the Finance Committee of the Board of Directors shall be, and hereby it is, authorized and empowered, in the name, place and stead of the Board of Directors of the Company, to authorize at any time or times deemed appropriate one or more issues and sales of debt securities by the Company and, in connection with any such issue, to determine, approve or appoint, as the case may be (i) the titles of the debt securities; (ii) the aggregate principal amount and denominations; (iii) the maturity or maturities; (iv) the price to be received by the Company in any public or private offering of the debt securities (which may be at a discount from the principal amount of any such debt securities at their maturity); (v) the rate or rates at which the debt securities will bear interest, if any, and the date from which such interest will accrue; (vi) any mandatory or optional sinking fund or analogous provisions; (vii) the date, if any, after which, and the price or prices at which, any debt securities may be redeemed at the option of the Company; (viii) if applicable, the terms and conditions upon which any debt securities may be payable prior to final maturity at the option of the holder thereof or otherwise; (ix) if applicable, the terms and conditions upon which the entire indebtedness on any series of the debt securities may be discharged by the deposit of cash and/or certain government obligations with the Trustee for the holders of the debt securities; (x) the restrictive covenants, if any, to be imposed upon the Company relating to any debt securities; (xi) any authenticating or paying agents, transfer agents or registrars (collectively, the "Fiduciaries"); (xii) the terms and conditions of the issuance and sale of the debt securities, including the price at which any debt securities may be sold by the Company and the plans for distribution of the debt securities, and the compensation to be paid any underwriters or agents for sale in connection with such distribution; (xiii) if applicable, the specific portions of the Company's existing indebtedness to be refinanced from the proceeds of any sale of the debt securities; and (xiv) such other terms, conditions and provisions as the Finance Committee shall deem appropriate. RESOLVED FURTHER, That the proper officers of the Company be, and hereby they are, authorized and directed to take any and all actions which they may deem necessary or advisable to effect the issuance of one or more series of debt securities under the Indenture and otherwise carry out the terms and provisions of the Indenture. RESOLVED FURTHER, That the proper officers of the Company be, and hereby each of them is, authorized, in the name and on behalf of the Company, to execute and deliver such other agreements, documents, certificates and instruments as may be required by any Fiduciary in connection with the Indenture or as may be necessary or appropriate in connection with the issuance and sale of the debt securities. RESOLVED FURTHER, That any Fiduciary be, and hereby it is, authorized to rely and act upon, and shall be fully protected in so relying and acting upon, any instructions received by it and signed by any officer of the Company or by counsel for the Company, and to rely and act upon, and shall be fully protected in so relying and acting upon, any Debenture, assignment, power of attorney, certificate, order, instruction, notice or other instrument or paper believed by it to be genuine and duly authorized and properly executed; that the Company may reimburse any such Fiduciary for all expenses incurred by it in the performance of its duties; that the Company may indemnify and hold harmless each Fiduciary from and against any and all claims, suits, damages, losses, expenses (including reasonable counsel fees) and liabilities which may be incurred by it or to which it may be subjected by reason of, or in connection with, its appointment and duties excepting only such as shall result from its own negligence or bad faith; and that the proper officers of the Company be, and each of them hereby is, authorized, in the name and on behalf of the Company, to execute and deliver a written order to the appropriate Fiduciary directing such Fiduciary when debt securities have been properly executed by the Company to authenticate them in such principal amount as shall have been determined by the Finance Committee, to deliver such debt securities to, or upon the order of the Company, and thereafter to authenticate and deliver such other debt securities as may be necessary upon registration or transfer of, in exchange for, or in lieu of, any outstanding debt securities, all in accordance with the terms of the Indenture. RESOLVED FURTHER, That the President and the Secretary of the Company be, and hereby each of them is, authorized, empowered and directed to execute, by manual or facsimile signature, the debt securities in the aggregate principal amount to be determined as provided in the Indenture and in definitive registered form, and to execute, by manual or facsimile signature, from time to time such additional debt securities as may be necessary to effect transfers of the debt securities and exchanges of the debt securities for debt securities of other denominations, and the President or any Vice President or the Treasurer or any Assistant Treasurer of the Company be, and hereby each of them is, authorized, empowered and directed to deliver from time to time the debt securities, executed in the manner and in the principal amount as aforesaid, to the Trustee for authentication and delivery upon the written order of the Company signed by such officer, all as provided in the Indenture and further authorized by the Finance Committee. RESOLVED FURTHER, That the proper officers of the Company shall be, and hereby they are, authorized and empowered to select underwriters, purchasers or agents for sale of the debt securities and to approve forms of underwriting agreements, purchase agreements or agency agreements relating to the sale and distribution of the debt securities and providing for the terms and conditions of sales of series of debt securities, subject to the ratification of the Finance Committee and the proper officers of the Company be, and hereby they are, authorized, empowered and directed, on behalf of the Company and under its corporate seal if necessary or advisable, to execute and deliver from time to time one or more such agreements in such form as the Finance Committee or the officers executing the same may approve, such approval to be evidenced conclusively by the execution thereof. RESOLVED FURTHER, That the proper officers of the Company be, and hereby they are, authorized, in the name and on behalf of the Company and under its corporate seal if necessary or advisable, to make application to such securities exchange as the Finance Committee shall deem necessary or appropriate for the listing thereon of debt securities and that each such officer is authorized to appear before any official or officials or before any body of any such exchange, and to execute and deliver any and all papers and agreements, specifically including, without limitation, indemnity agreements for the benefit of any such exchange relating to the use of facsimile signatures, and to do any and all things which may be necessary to effect such listing and to do any and all things which otherwise may be necessary to effect registration of the debt securities under Section 12 of the Securities Exchange Act of 1934, as amended. RESOLVED FURTHER, That the proper officers of the Company be, and hereby they are, authorized, empowered and directed to make applications in such states as they shall deem necessary or advisable to qualify or register (or obtain an exemption from qualification or registration) for offer or sale of all or such part of the debt securities, and to license the Company as a broker or dealer and to take on behalf of the Company any and all actions, as they may deem necessary or advisable in order to comply with the Blue Sky or securities laws of any state of the United States of America and in connection therewith to execute and file requisite papers and documents, including but not limited to applications, reports, surety bonds, irrevocable consents and appointments of attorneys for service of process, and to take any and all further action which they may deem necessary or advisable in order to maintain any such registration or qualification (or exemption) for so long as they deem necessary or as required by law or by any underwriters of the debt securities, and the execution by such officers of any such paper or document or the doing by them of any action in connection with the foregoing matters shall conclusively establish their authority from the Company for the papers and documents so executed and the action so taken. RESOLVED FURTHER, That if in any state in which action is taken to qualify or register any debt securities or to license the Company as a broker or dealer a prescribed form of resolution or resolutions relating to such licensing, qualification or registration, or to any application, report, surety bond, appointment or other instrument in connection therewith, is required, each such resolution shall be deemed to have been, and hereby is, adopted by this Board of Directors, and the Secretary or any Assistant Secretary of the Company is hereby authorized, empowered and directed to certify the adoption of any such resolution as though the same were presented at this meeting and adopted hereby, all such resolutions to be inserted in the minute book of the Company as part of the minutes of the Company. RESOLVED FURTHER, That the proper officers of the Company be, and hereby they are, authorized, empowered and directed to take any and all such further action for and on behalf of the Company and to execute, for and on behalf of the Company and under its corporate seal if necessary or advisable, and to deliver any and all agreements, certificates, applications or other instruments as the Finance Committee or such officers may deem necessary or advisable in order to effect and confirm the authorization, issuance and sale of the debt securities and to implement the foregoing resolutions and the transactions contemplated thereby. RESOLVED FURTHER, That whenever used in the foregoing resolutions, the term "proper officers" shall mean the President or any Vice President of the Company. Exhibit 4.01 (j) EXCERPT FROM THE MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF EQUITABLE RESOURCES, INC. HELD JULY 18, 1996 WHEREAS, on January 18, 1996, the Board of Directors of this Company adopted resolutions authorizing and approving a financing program involving the issue and sale from time to time by the Company of up to $250 million aggregate principal amount of debt securities to be issued under the Indenture dated as of April 1, 1983, as supplemented, between the Company and Bankers Trust Company, as Trustee; and WHEREAS, it has since been determined that the Company will not issue the securities under the 1983 Indenture but will enter into a new Indenture with the Bank of Montreal Trust Company as Trustee. NOW, THEREFORE, BE IT RESOLVED, That the resolution adopted by the Board of Directors on January 18, 1996, relating specifically to the issuance of debt securities under the Indenture dated April 1, 1983 between the Company and Bankers Trust Company, as Trustee, be amended to read as follows: RESOLVED, That this Board hereby authorizes and approves a financing program involving the issue and sale from time to time by the Company of up to $250 million aggregate principal amount of debt securities to be issued under an Indenture between the Company and the Bank of Montreal Trust Company, as Trustee, and hereby authorizes the proper officers of the Company to execute and deliver, on behalf of the Company, such Indenture between the Company and the Bank of Montreal Trust Company. RESOLVED FURTHER, That all other resolutions adopted by the Board of Directors on January 18, 1996, pertaining to the $250 million debt financing shall remain in full force and effect. EX-10.04A 5 DEFERRED PAYMENT DIRECTOR FEES-CHRISTIANO Exhibit 10.04 (a) EQUITABLE RESOURCES, INC. Board of Directors Deferred Compensation Agreement THIS AGREEMENT, made and executed this 29th day of May, 1996, by and between Equitable Resources, Inc., herein designated as "Equitable", and Paul Christiano, herein designated as the "Participant." WITNESSETH: WHEREAS, the Participant is currently a member of the Board of Directors of Equitable as a Director or an Advisory Director; and WHEREAS, Equitable and the Participant desire to defer all of the fees arising from the above-stated relationship. NOW, THEREFORE, the parties hereby agree as follows: Section 1 - Account 1.1) Effective May 29, 1996, the Participant herein elects to defer, under the terms of this Agreement, all compensation earned for his/her service as a Director or an Advisory Director of Equitable for the calendar year 1996. 1.2) Equitable shall establish a bookkeeping account, hereinafter referred to as the "Account", and shall credit to the Account the amounts of the deferred fees. 1.3) Interest shall be credited to the Account monthly. The rate of interest shall be the same as the yield for 30-day Treasury Bills applicable to the first day of such month. Section 2 - Payment 2.1) All amounts credited to the Account on the Participant's behalf shall be payable in one lump sum by Equitable to the Participant on _________________ (date selected by the Participant) but in no event later than sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable. Unless a date specific is selected by the Participant, the distribution will be made within sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable; provided, however, that nothing contained in this Section 2.1 shall negate the provisions of Section 2.3 below. 2.2) In the event of the death of the Participant, such payment shall be made to the Participant's beneficiary. For purposes of the Agreement, "beneficiary" means any person(s) or trust(s) or combination of these, last designated by the Participant to receive benefits provided under this Agreement. Such designation shall be in writing filed with the Compensation Committee of the Board of Directors (the "Committee") and shall be revocable at any time through written instrument similarly filed without consent of any beneficiary. In the absence of any designation, the beneficiary shall be the Participant's spouse, if surviving, otherwise, all amounts payable hereunder shall be delivered by Equitable to the executors and administrators of the Participant's estate for administration as a part thereof. 2.3) For financial reasons, the Participant may apply to the Committee for withdrawal from the Agreement prior to the Payment Date. Such early withdrawal shall lie within the absolute discretion of the Committee. Upon approval from the Committee, and within fifteen (15) days thereafter, the Participant will be deemed to have withdrawn from the Agreement and a distribution, in the amount necessary, will be made in a one-time payment. Amounts still payable to the Participant after the application of this Paragraph 2.3 shall be distributed pursuant to the foregoing Paragraphs of this Section 2. Section 3 - Miscellaneous Provisions 3.1) Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between Equitable and the Participant, his/her designated beneficiary or any other person. Any fees deferred under the provisions of this Agreement shall continue for all purposes to be a part of the general funds of Equitable. To the extent that any person acquires a right to receive payment from Equitable under this Agreement, such right shall be no greater than the right of any unsecured general creditor of Equitable. 3.2) The right of the Participant or any other person to the payment of deferred fees under this Agreement shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. 3.3) If the Committee shall find that any person to whom any payment is payable under this Agreement is unable to care for his/her affairs because of illness or accident, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Committee may determine. Any such payment shall be a complete discharge of the liabilities of Equitable under this Agreement. 3.4) Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the service of Equitable as a member of the Board of Directors. 3.5) This Agreement shall be binding upon and inure to the benefit of Equitable, its successors and assigns and the Participant and his/her heirs, executors, administrators and legal representatives. 3.6) Equitable may terminate this Plan at any time. Upon such termination, the Committee shall dispose of any benefits of the Participant as provided in Section 2. Equitable may also amend the provisions of this Plan at any time; provided, however, that no amendment shall affect the rights of the Participant, or his/her beneficiaries, to the receipt of payment of benefits to the extent of any compensation deferred before the time of the amendment. This Agreement shall terminate when the payment due under this Agreement is made. 3.7) This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. Section 4 - Committee 4.1) The Committee's interpretation and construction of the Agreement, and the actions thereunder, including the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. The Committee members shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to his/her own willful misconduct or lack of good faith. IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by its duly authorized officers and the Participant has hereunto set his/her hand as of the date first above written. ATTEST: EQUITABLE RESOURCES, INC. s/ Audrey C. Moeller s/ Frederick H. Abrew - - -------------------------- ----------------------------- Vice President and President and Corporate Secretary Chief Executive Officer WITNESS: (Participant) - - -------------------------- ------------------------------ s/ Norene Christiano s/ Paul Christiano EX-10.04B 6 DEFERRED PAYMENT DIRECTOR FEES-CHRISTIANO Exhibit 10.04 (b) EQUITABLE RESOURCES, INC. Board of Directors Deferred Compensation Agreement THIS AGREEMENT, made and executed this 26th day of November, 1996, by and between Equitable Resources, Inc., herein designated as "Equitable", and Paul Christiano, herein designated as the "Participant." WITNESSETH: WHEREAS, the Participant is currently a member of the Board of Directors of Equitable as a Director or an Advisory Director; and WHEREAS, Equitable and the Participant desire to defer all of the fees arising from the above-stated relationship. NOW, THEREFORE, the parties hereby agree as follows: Section 1 - Account 1.1) Effective January 1, 1997, the Participant herein elects to defer, under the terms of this Agreement, all compensation earned for his/her service as a Director or an Advisory Director of Equitable for the calendar year 1997. 1.2) Equitable shall establish a bookkeeping account, hereinafter referred to as the "Account", and shall credit to the Account the amounts of the deferred fees. 1.3) Interest shall be credited to the Account monthly. The rate of interest shall be the same as the yield for 30-day Treasury Bills applicable to the first day of such month. Section 2 - Payment 2.1) All amounts credited to the Account on the Participant's behalf shall be payable in one lump sum by Equitable to the Participant on _________________ (date selected by the Participant) but in no event later than sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable. Unless a date specific is selected by the Participant, the distribution will be made within sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable; provided, however, that nothing contained in this Section 2.1 shall negate the provisions of Section 2.3 below. 2.2) In the event of the death of the Participant, such payment shall be made to the Participant's beneficiary. For purposes of the Agreement, "beneficiary" means any person(s) or trust(s) or combination of these, last designated by the Participant to receive benefits provided under this Agreement. Such designation shall be in writing filed with the Compensation Committee of the Board of Directors (the "Committee") and shall be revocable at any time through written instrument similarly filed without consent of any beneficiary. In the absence of any designation, the beneficiary shall be the Participant's spouse, if surviving, otherwise, all amounts payable hereunder shall be delivered by Equitable to the executors and administrators of the Participant's estate for administration as a part thereof. 2.3) For financial reasons, the Participant may apply to the Committee for withdrawal from the Agreement prior to the Payment Date. Such early withdrawal shall lie within the absolute discretion of the Committee. Upon approval from the Committee, and within fifteen (15) days thereafter, the Participant will be deemed to have withdrawn from the Agreement and a distribution, in the amount necessary, will be made in a one-time payment. Amounts still payable to the Participant after the application of this Paragraph 2.3 shall be distributed pursuant to the foregoing Paragraphs of this Section 2. Section 3 - Miscellaneous Provisions 3.1) Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between Equitable and the Participant, his/her designated beneficiary or any other person. Any fees deferred under the provisions of this Agreement shall continue for all purposes to be a part of the general funds of Equitable. To the extent that any person acquires a right to receive payment from Equitable under this Agreement, such right shall be no greater than the right of any unsecured general creditor of Equitable. 3.2) The right of the Participant or any other person to the payment of deferred fees under this Agreement shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. 3.3) If the Committee shall find that any person to whom any payment is payable under this Agreement is unable to care for his/her affairs because of illness or accident, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Committee may determine. Any such payment shall be a complete discharge of the liabilities of Equitable under this Agreement. 3.4) Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the service of Equitable as a member of the Board of Directors. 3.5) This Agreement shall be binding upon and inure to the benefit of Equitable, its successors and assigns and the Participant and his/her heirs, executors, administrators and legal representatives. 3.6) Equitable may terminate this Plan at any time. Upon such termination, the Committee shall dispose of any benefits of the Participant as provided in Section 2. Equitable may also amend the provisions of this Plan at any time; provided, however, that no amendment shall affect the rights of the Participant, or his/her beneficiaries, to the receipt of payment of benefits to the extent of any compensation deferred before the time of the amendment. This Agreement shall terminate when the payment due under this Agreement is made. 3.7) This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. Section 4 - Committee 4.1) The Committee's interpretation and construction of the Agreement, and the actions thereunder, including the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. The Committee members shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to his/her own willful misconduct or lack of good faith. IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by its duly authorized officers and the Participant has hereunto set his/her hand as of the date first above written. ATTEST: EQUITABLE RESOURCES, INC. s/ Audrey C. Moeller s/ Frederick H. Abrew - - -------------------------- ------------------------------ Vice President and President and Corporate Secretary Chief Executive Officer WITNESS: (Participant) - - -------------------------- ------------------------------ s/ Edna L. Jackson s/ Paul Christiano EX-10.09 7 AMENDED SHORT-TERM INCENTIVE COMP. PLAN Exhibit 10.09 EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Short-Term Incentive Compensation Plan (Effective March 1997) 1. For each plan calendar year, the Compensation Committee (Committee) shall approve: Participants eligible for awards. Target awards for each participant. A net income threshold which must be met before the plan is funded. An estimate of the incentive fund required based on the aggregate estimated target awards for the participants for that year. 2. Each participant's target award shall be allocated to various corporate, unit and personal performance measures. Objectives and/or goals shall be established for each performance measure consistent with Equitable Resources' business plan. 3. Following the close of the plan year, each participant's targeted award will be adjusted to reflect corporate, unit and individual performance against their pre-established goals and objectives. Targeted awards can be enhanced by up to 50% based on performance. The targeted award becomes a recommended award after this performance evaluation process. The Chief Executive Officer shall review the recommended awards to ensure that each participant's performance is objectively and consistently evaluated. 4. Following the completion of the Company's consolidated financial statements for the calendar year, the incentive fund shall be determined based upon the Company's net income financial performance. This net income number will be multiplied by a pre-determined range of percentages to determine the amount of funding for the pool. These funding percentages range from 1.7% to 4.5% of net income. In no event will the incentive fund exceed 4.5% of net income. Should the Company's financial performance level be less than the net income threshold as determined by the Committee, there shall be no incentive fund for that plan calendar year and no incentive awards shall be authorized, unless the Committee at its sole discretion determines otherwise. Should the Company's financial performance be equal to or higher than the threshold for plan awards, net income will be multiplied by the appropriate net income funding percentage to fund the Plan. Should the sum of the recommended awards be less than or greater than the total recommended awards, each participant will receive a percentage of the incentive fund based on their overall percentage share of the recommended award total. In no case will an employee receive more than 100% of their salary in incentive compensation. The Committee shall authorize the actual incentive award for each participant including any adjustments it may make thereto. 5. The actual incentive award shall be paid to each participant at such time and in such periodic amount as the Committee shall, from time to time, determine, provided however, that in no event shall the payments extend beyond three (3) months from the date the Committee authorizes the actual incentive awards. 6. The actual incentive award, once authorized, by the Committee, may be subsequently revoked should the participant's employment with the Company terminate; provided however, that upon normal retirement or death, all authorized actual incentive awards become due and payable and provided further, that revocation shall not be applicable where the participant's termination of employment is caused directly or indirectly by a change in control of the Company. (Change in control of the Company is defined as the acquisition of 10% or more of the Company's outstanding voting shares and/or a change in the majority of the Board of Directors as a result of a cash tender offer or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of these transactions without the prior consent of the Board of Directors.) 7. The Company's Short-Term Incentive Compensation Plan may be canceled at the discretion of the Board of Directors, but such cancellation shall not affect actual incentive awards previously authorized. EX-10.14A 8 DEFERRED PAYMENT DIRECTOR FEES-SAVILL Exhibit 10.14 (a) EQUITABLE RESOURCES, INC. Board of Directors Deferred Compensation Agreement THIS AGREEMENT, made and executed this 24th day of May, 1996, by and between Equitable Resources, Inc., herein designated as "Equitable", and Phyllis A. Savill, herein designated as the "Participant." WITNESSETH: WHEREAS, the Participant is currently a member of the Board of Directors of Equitable as a Director or an Advisory Director; and WHEREAS, Equitable and the Participant desire to defer all of the fees arising from the above-stated relationship. NOW, THEREFORE, the parties hereby agree as follows: Section 1 - Account 1.1) Effective May 24, 1996, the Participant herein elects to defer, under the terms of this Agreement, all compensation earned for his/her service as a Director or an Advisory Director of Equitable for the calendar year 1996. 1.2) Equitable shall establish a bookkeeping account, hereinafter referred to as the "Account", and shall credit to the Account the amounts of the deferred fees. 1.3) Interest shall be credited to the Account monthly. The rate of interest shall be the same as the yield for 30-day Treasury Bills applicable to the first day of such month. Section 2 - Payment 2.1) All amounts credited to the Account on the Participant's behalf shall be payable in one lump sum by Equitable to the Participant on _________________ (date selected by the Participant) but in no event later than sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable. Unless a date specific is selected by the Participant, the distribution will be made within sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable; provided, however, that nothing contained in this Section 2.1 shall negate the provisions of Section 2.3 below. 2.2) In the event of the death of the Participant, such payment shall be made to the Participant's beneficiary. For purposes of the Agreement, "beneficiary" means any person(s) or trust(s) or combination of these, last designated by the Participant to receive benefits provided under this Agreement. Such designation shall be in writing filed with the Compensation Committee of the Board of Directors (the "Committee") and shall be revocable at any time through written instrument similarly filed without consent of any beneficiary. In the absence of any designation, the beneficiary shall be the Participant's spouse, if surviving, otherwise, all amounts payable hereunder shall be delivered by Equitable to the executors and administrators of the Participant's estate for administration as a part thereof. 2.3) For financial reasons, the Participant may apply to the Committee for withdrawal from the Agreement prior to the Payment Date. Such early withdrawal shall lie within the absolute discretion of the Committee. Upon approval from the Committee, and within fifteen (15) days thereafter, the Participant will be deemed to have withdrawn from the Agreement and a distribution, in the amount necessary, will be made in a one-time payment. Amounts still payable to the Participant after the application of this Paragraph 2.3 shall be distributed pursuant to the foregoing Paragraphs of this Section 2. Section 3 - Miscellaneous Provisions 3.1) Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between Equitable and the Participant, his/her designated beneficiary or any other person. Any fees deferred under the provisions of this Agreement shall continue for all purposes to be a part of the general funds of Equitable. To the extent that any person acquires a right to receive payment from Equitable under this Agreement, such right shall be no greater than the right of any unsecured general creditor of Equitable. 3.2) The right of the Participant or any other person to the payment of deferred fees under this Agreement shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. 3.3) If the Committee shall find that any person to whom any payment is payable under this Agreement is unable to care for his/her affairs because of illness or accident, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Committee may determine. Any such payment shall be a complete discharge of the liabilities of Equitable under this Agreement. 3.4) Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the service of Equitable as a member of the Board of Directors. 3.5) This Agreement shall be binding upon and inure to the benefit of Equitable, its successors and assigns and the Participant and his/her heirs, executors, administrators and legal representatives. 3.6) Equitable may terminate this Plan at any time. Upon such termination, the Committee shall dispose of any benefits of the Participant as provided in Section 2. Equitable may also amend the provisions of this Plan at any time; provided, however, that no amendment shall affect the rights of the Participant, or his/her beneficiaries, to the receipt of payment of benefits to the extent of any compensation deferred before the time of the amendment. This Agreement shall terminate when the payment due under this Agreement is made. 3.7) This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. Section 4 - Committee 4.1) The Committee's interpretation and construction of the Agreement, and the actions thereunder, including the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. The Committee members shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to his/her own willful misconduct or lack of good faith. IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by its duly authorized officers and the Participant has hereunto set his/her hand as of the date first above written. PARTICIPANT: EQUITABLE RESOURCES, INC. s/ Phyllis A. Savill s/ Frederick H. Abrew - - ----------------------- ---------------------------------------- President and Chief Executive Officer WITNESS: ATTEST: s/ Barry Savill s/ Audrey C. Moeller - - ----------------------- ---------------------------------------- Vice President and Corporate Secretary EX-10.14B 9 DEFERRED PAYMENT DIRECTORS FEES-SAVILL Exhibit 10.14 (b) EQUITABLE RESOURCES, INC. Board of Directors Deferred Compensation Agreement THIS AGREEMENT, made and executed this 27th day of November, 1996, by and between Equitable Resources, Inc., herein designated as "Equitable", and Phyllis A. Savill, herein designated as the "Participant." WITNESSETH: WHEREAS, the Participant is currently a member of the Board of Directors of Equitable as a Director or an Advisory Director; and WHEREAS, Equitable and the Participant desire to defer all of the fees arising from the above-stated relationship. NOW, THEREFORE, the parties hereby agree as follows: Section 1 - Account 1.1) Effective January 1, 1997, the Participant herein elects to defer, under the terms of this Agreement, all compensation earned for his/her service as a Director or an Advisory Director of Equitable for the calendar year 1997. 1.2) Equitable shall establish a bookkeeping account, hereinafter referred to as the "Account", and shall credit to the Account the amounts of the deferred fees. 1.3) Interest shall be credited to the Account monthly. The rate of interest shall be the same as the yield for 30-day Treasury Bills applicable to the first day of such month. Section 2 - Payment 2.1) All amounts credited to the Account on the Participant's behalf shall be payable in one lump sum by Equitable to the Participant on _________________ (date selected by the Participant) but in no event later than sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable. Unless a date specific is selected by the Participant, the distribution will be made within sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable; provided, however, that nothing contained in this Section 2.1 shall negate the provisions of Section 2.3 below. 2.2) In the event of the death of the Participant, such payment shall be made to the Participant's beneficiary. For purposes of the Agreement, "beneficiary" means any person(s) or trust(s) or combination of these, last designated by the Participant to receive benefits provided under this Agreement. Such designation shall be in writing filed with the Compensation Committee of the Board of Directors (the "Committee") and shall be revocable at any time through written instrument similarly filed without consent of any beneficiary. In the absence of any designation, the beneficiary shall be the Participant's spouse, if surviving, otherwise, all amounts payable hereunder shall be delivered by Equitable to the executors and administrators of the Participant's estate for administration as a part thereof. 2.3) For financial reasons, the Participant may apply to the Committee for withdrawal from the Agreement prior to the Payment Date. Such early withdrawal shall lie within the absolute discretion of the Committee. Upon approval from the Committee, and within fifteen (15) days thereafter, the Participant will be deemed to have withdrawn from the Agreement and a distribution, in the amount necessary, will be made in a one-time payment. Amounts still payable to the Participant after the application of this Paragraph 2.3 shall be distributed pursuant to the foregoing Paragraphs of this Section 2. Section 3 - Miscellaneous Provisions 3.1) Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between Equitable and the Participant, his/her designated beneficiary or any other person. Any fees deferred under the provisions of this Agreement shall continue for all purposes to be a part of the general funds of Equitable. To the extent that any person acquires a right to receive payment from Equitable under this Agreement, such right shall be no greater than the right of any unsecured general creditor of Equitable. 3.2) The right of the Participant or any other person to the payment of deferred fees under this Agreement shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. 3.3) If the Committee shall find that any person to whom any payment is payable under this Agreement is unable to care for his/her affairs because of illness or accident, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Committee may determine. Any such payment shall be a complete discharge of the liabilities of Equitable under this Agreement. 3.4) Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the service of Equitable as a member of the Board of Directors. 3.5) This Agreement shall be binding upon and inure to the benefit of Equitable, its successors and assigns and the Participant and his/her heirs, executors, administrators and legal representatives. 3.6) Equitable may terminate this Plan at any time. Upon such termination, the Committee shall dispose of any benefits of the Participant as provided in Section 2. Equitable may also amend the provisions of this Plan at any time; provided, however, that no amendment shall affect the rights of the Participant, or his/her beneficiaries, to the receipt of payment of benefits to the extent of any compensation deferred before the time of the amendment. This Agreement shall terminate when the payment due under this Agreement is made. 3.7) This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. Section 4 - Committee 4.1) The Committee's interpretation and construction of the Agreement, and the actions thereunder, including the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. The Committee members shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to his/her own willful misconduct or lack of good faith. IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by its duly authorized officers and the Participant has hereunto set his/her hand as of the date first above written. ATTEST: EQUITABLE RESOURCES, INC. s/ Audrey C. Moeller s/ Frederick H. Abrew - - -------------------------- -------------------------------- Vice President and President and Corporate Secretary Chief Executive Officer WITNESS: (Participant) - - -------------------------- -------------------------------- s/ Lola Arbuzow s/ Phyllis A. Savill EX-11.01 10 FOR YEARS ENDED DECEMBER 31, 1996, 1996 AND 1994
Exhibit 11.01 EQUITABLE RESOURCES, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 1996 1995 1994 --------------------------------------- EARNINGS: Net income............................................... $ 59,379 $ 1,548 $60,729 Interest net of applicable income taxes on 9 1/2% convertible subordinated debentures ........... 35 52 146 ---------- --------- --------- Adjusted earnings................................... $ 59,414 $ 1,600 $60,875 ========== ========= ======= SHARES: Average common shares outstanding ....................... 35,188 34,793 34,509 Dilutive effect of conversion of 9 1/2% convertible subordinated debentures................... 55 84 220 Dilutive effect of stock options outstanding............. - 11 11 ---------- --------- --------- Total .............................................. 35,243 34,888 34,740 ========== ========= ========= PRIMARY EARNINGS PER SHARE.................................. $1.69 $.04 $1.76 ===== ==== ===== FULLY DILUTED EARNINGS PER SHARE............................ $1.69 $.04 $1.75 ===== ==== =====
EX-21 11 SCHEDULE OF SUBSIDIARIES OF ERI Exhibit 21 EQUITABLE RESOURCES, INC. SUBSIDIARY COMPANIES Andex Energy, Inc. EQT Capital Corporation Equitable Pipeline Company Equitable Power Services Company Equitable Resources (Argentina) Company Equitable Resources (Canada) Limited Equitable Resources Energy Company Equitable Storage Company, L.L.C. Equitrans, L.P. EREC Nevada, Inc. ERI Global Partners, Inc. ERI Holdings ERI Incorporated ERI Investments, Inc. ERI Services, Inc. ERI Services (St. Lucia) Limited ERI Trading Company ET Avoca Company ET Blue Grass Company 420 Energy Investments, Inc. Hershey Oil Corporation IEC Hunterdon, Inc. IEC Management Services, Inc. IEC Montclair, Inc. IEC Plymouth, Inc. Independent Energy Corporation Independent Energy Finance Corporation Independent Energy Operations, Inc. Kentucky West Virginia Gas Company, L.L.C. LIG Chemical Company LIG, Inc. LIG Liquids Company L.L.C. Louisiana Intrastate Gas Company L.L.C. Nora Transmission Company Scallop Thermal Management, Inc. Three Rivers Pipeline Corporation Tuscaloosa Pipeline Company EX-23.01 12 CONSENT OF INDEPENDENT AUDITOR Exhibit 23.01 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference of our report dated February 19, 1997, with respect to the consolidated financial statements and schedule of Equitable Resources, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 1996 in the Prospectus part of the following Registration Statements: Registration Statement No. 33-52151 on Form S-8 pertaining to the 1994 Equitable Resources, Inc. Long-Term Incentive Plan; Registration Statement No. 33-52137 on Form S-8 pertaining to the 1994 Equitable Resources, Inc. Non-Employee Directors' Stock Incentive Plan; Post-Effective Amendment No. 2 to Registration Statement No. 2-69010 on Form S-8 pertaining to the Equitable Resources, Inc. Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan; Post-Effective Amendment No. 1 to Registration Statement No. 33-00252 on Form S-8 pertaining to the Equitable Resources, Inc. Employee Savings Plan; Post-Effective Amendment No. 1 to Registration Statement No. 33-10508 on Form S-8 pertaining to the Equitable Resources, Inc. Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan; Registration Statement No. 33-53703 on Form S-3 pertaining to the registration of $100,000,000 Medium Term Notes, Series C of Equitable Resources, Inc.; Registration Statement No. 33-62025 on Form S-3 pertaining to the registration of 71,110 shares of Equitable Resources, Inc. common stock; Registration Statement No. 33-62027 on Form S-3 pertaining to the registration of 161,454 shares of Equitable Resources, Inc. common stock; Registration Statement No. 333-01879 on Form S-8 pertaining to the Equitable Resources, Inc. Employee Stock Purchase Plan; Registration Statement No. 333-03149 on Form S-3 pertaining to the registration of 239,316 shares of Equitable Resources, inc. common stock; Registration Statement No. 333-06839 on Form S-3 pertaining to the registration of $168,000,000 of debt securities of Equitable Resources, Inc.; Registration Statement No. 333-22529 on Form S-8 pertaining to the Equitable Resources, Inc. Employee Savings and Protection Plan. By /s/ Ernst & Young LLP Ernst & Young LLP Pittsburgh, Pennsylvania March 24, 1997 EX-27 13 FDS --
5 1000 12-MOS DEC-31-1996 DEC-31-1996 14,737 0 319,332 10,714 38,009 485,761 2,210,991 731,306 1,979,712 520,414 422,112 0 0 223,637 518,646 2,096,299 1,861,799 1,861,799 0 1,733,011 0 17,707 41,825 89,961 30,582 59,379 0 0 0 59,379 1.69 1.69
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