Energen Adds to Hedge Positions in 2012, 2013

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Energen Corporation (NYSE: EGN) announced today that its oil and gas exploration and production subsidiary, Energen Resources Corporation, has added to its liquids hedge positions in 2012 and 2013.

For 2012, the company entered into swap contracts for 480,000 barrels of oil at a NYMEX price of $100 per barrel and for approximately 15.1 million gallons of natural gas liquids (NGL) at a price of $1.26 per gallon. Energen now has 80 percent of its estimated 2012 oil production of 8.5 million barrels hedged at a NYMEX-equivalent price of $87.86 per barrel as well as 50 percent of its estimated NGL production of 117.9 million gallons hedged at an average price of 98 cents per gallon.

Energen also hedged an additional 816,000 barrels of its 2013 oil production at a NYMEX price of $96 per barrel; this brings Energen’s 2013 oil hedge position to 7.6 million barrels at a NYMEX-equivalent price of $89.81 per barrel. The company estimates that its 2013 oil production will range from 10-10.5 million barrels.

Energen historically utilizes commodity derivative instruments to help insulate its cash flows and earnings from commodity price volatility. The company’s total hedge positions and hedge positions by type in 2012, 2013, and 2014 are as follows:

2012
Commodity	Hedge Volumes	Estimated Production	Hedge %	NYMEXe Price
Oil	6.8 MMBO	8.5 MMBO	80 %	$ 87.86
NGL	58.5 MMgal	117.9 MMgal	50 %	$  0.98
Natural Gas	40.5 Bcf	76.5 Bcf	53 %	$  4.95

By hedge type:
Oil Hedges	Volumes	Assumed Differential	NYMEXe Price
Sour Oil (WTS)	3,124 MBO	$ 2.00 per barrel	$ 82.20 per barrel
NYMEX	3,638 MBO	–	$ 92.72 per barrel
Gas Hedges	Volumes	Assumed Differential	NYMEXe Price
San Juan Basin	29.5 Bcf	$ 0.30 per Mcf	$ 4.90 per Mcf
NYMEX	11.0 Bcf	–	$ 5.07 per Mcf
2013
Commodity	Hedge Volumes	Estimated Production	NYMEXe Price
Oil	7.6 MMBO	10.0-10.5 MMBO	$ 89.88
NGL	44.5 MMgal	126.0-147.0 MMgal	$  1.02
Natural Gas	33.9 Bcf	72.0-78.0 Bcf	$  5.21
By hedge type:
Oil Hedges	Volumes	Assumed Differential	NYMEXe Price
Sour Oil (WTS)	2,768 MBO	$ 3.00 per barrel	$ 85.34 per barrel
NYMEX	4,875 MBO	–	$ 92.46 per barrel
Gas Hedges	Volumes	Assumed Differential	NYMEXe Price
San Juan Basin	25.1 Bcf	$ 0.30 per Mcf	$ 5.18 per Mcf
NYMEX	8.8 Bcf	–	$ 5.30 per Mcf
2014
Commodity	Hedge Volumes	NYMEXe Price
Oil	5.6 MMBO	$ 90.56
Natural Gas	19.8 Bcf	$  5.50
By hedge type:
Gas Hedges	Volumes	Assumed Differential	NYMEXe Price
San Juan Basin	16.8 Bcf	$ 0.30 per Mcf	$ 5.46 per Mcf
NYMEX	3.0 Bcf	–	$ 5.72 per Mcf

Average realized oil and gas prices for Energen Resources' production associated with NYMEX contracts as well as for unhedged production will reflect the impact of basis differentials. Average realized NGL prices will be net of transportation and fractionation fees. For production associated with basin-specific contracts, Energen Resources will receive the contracted hedge price. Energen may hedge basis differentials as applicable. In the tables above, basin-specific contract prices were converted for comparability purposes to a NYMEX-equivalent price by adding to them Energen Resources' assumed basis differentials.

Energen is an active and long-time practitioner of using commodity derivative contracts to manage its exposure to price volatility. Gains and losses from the change in fair value of derivative instruments that do not qualify for cash flow hedge accounting are reported in operating revenues each applicable reporting period and, therefore, can cause non-cash earnings volatility.

Energen Corporation is an oil and gas exploration and production company with headquarters in Birmingham, Alabama. Through Energen Resources Corporation, the company has approximately 900 million barrels of oil-equivalent proved, probable, and possible reserves. These all-domestic reserves are located mainly in the San Juan and Permian basins. For more information, go to http://www.energen.com.

This release contains statements expressing expectations of future plans, objectives and performance that constitute forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Except as otherwise disclosed, the Company's forward-looking statements do not reflect the impact of possible or pending acquisitions, divestitures or restructurings. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A more complete discussion of risks and uncertainties that could affect future results of Energen and its subsidiaries is included in the Company's periodic reports filed with the Securities and Exchange Commission.