Energen's natural gas distribution business puts the energy out in Dixie, but the company also takes it in through gas and oil exploration operations that extend into the Southwest. The diversified energy company generates the majority of its sales from oil and gas exploration and production operations in the Southwest through subsidiary Energen Resources; in 2011 the unit had proved, probable, and possible reserves of 900 million barrels of oil equivalent. The company's regulated utility Alabama Gas Corporation (Alagasco) distributes natural gas to about 395,770 residential and 31,840 commercial and industrial customers.
Through Energen Resources, the company has oil and gas properties in the San Juan Basin in New Mexico and Colorado, the Permian Basin in West Texas, and the Black Warrior Basin in Alabama.
Alagasco distributes gas in 184 central and northern Alabama communities (including Birmingham and Montgomery).
Energen Resources sells most of its oil, gas, and natural gas liquids (NGL) to third parties.
Alagasco uses more than 23,200 miles of main and service lines to transport gas for commercial and industrial customers that buy from other suppliers.
Energen's revenues decreased by 6% in 2011 due to lower Natural Gas Distribution revenues because of a decline in gas costs and a drop in customer use, whereas revenues from oil and gas operations decreased as a result of significantly lower natural gas commodity prices.
Net income decreased by 11% in 2011 due to lower revenues, and an increase interest expense. Interest expense increased by $5.6 million in 2011 largely due to increased short-term borrowings and the August 2011 issuance of $400 million of Senior Notes by Energen.
Energen Resources has boosted its proved reserves, especially in West Texas's Permian Basin, through property acquisitions and developments. In February 2012, Energen completed the purchase of certain properties in the Permian Basin for $63 million. Energen acquired total proved reserves of 8.5 million barrels of oil equivalent.
That year it also teamed up with BHP Billiton to jointly develop 56,549 net acres currently under lease to Energen Resources in Reeves County, Texas, in the Delaware sub-basin of the Permian Basin.
In 2010 Energen Resources acquired Permian Basin assets in the Wolfberry trend for $188 million.