PITTSBURGH, Jan. 31 /PRNewswire-FirstCall/ -- Equitable Resources, Inc. (NYSE: EQT) today announced 2007 annual earnings per diluted share (EPS) of $2.10 on net income of $257.5 million. This compares with EPS of $1.80 on net income of $220.3 million in 2006. Several non-operational factors, discussed below, should be considered when comparing 2007 and 2006 results, including the sale of reserves in the second quarter 2007 and expenses incurred in 2006 and 2007 in connection with the terminated acquisition of The Peoples Natural Gas Company and Hope Gas, Inc.

RESULTS BY SEGMENT

Equitable Supply

Equitable Supply had operating income of $263.5 million in 2007, 2.1% lower than the $269.2 million in 2006. Total revenues for 2007 were $501.7 million, 2.7% higher than $488.6 in 2006, due to higher realized prices and higher sales volumes. Average well-head sales price increased 3.1% from $4.83 to $4.98 per Mcfe resulting from a higher percentage of unhedged gas sales and a higher realized hedged price. Sales volumes increased by 0.9 Bcfe to 77.1 Bcfe with daily sales of approximately 210 MMcfe per day at year end. Adjusting for the sale of reserves in the second quarter 2007, sales volumes increased by 5.4%. Gathering revenues declined by 3.5% to $107.1 million from $110.9 million, as a result of the gathering asset contribution to Nora Gathering, LLC in the second quarter 2007. Adjusting for the Nora transaction, gathered volumes increased 3.3%. The average gathering fee increased 11.8% from $1.02 per Mcfe to $1.14 per Mcfe.

Operating expenses increased from $219.4 million in 2006 to $238.1 million in 2007. Selling, general and administrative (SG&A) expenses were higher mainly from increased reserves for certain royalty disputes in the first quarter and other legal expenses. Depreciation, depletion and amortization expense, and lease operating expense were also higher, consistent with higher overall operating activity levels, but were partially offset by lower production taxes. At Gathering, higher depreciation, gathering and compression expense and SG&A were offset by the absence of expenses attributable to the transferred Nora gathering assets and lower production taxes.

Operating income for the 2007 fourth quarter totaled $75.3 million, $6.8 million higher than the $68.5 million of operating income in the fourth quarter 2006. Revenue increased by 4.4% resulting from higher NYMEX natural gas prices and higher sales volumes, partially offset by the loss of Nora gathering revenues. Sales volumes increased by 0.6% to 19.4 Bcfe. Adjusting for the sale of reserves in the second quarter, sales volume for the quarter increased 7.5% over the prior year quarter. Operating expenses totaled $56.0 million, $1.3 million lower than last year. Higher operating expenses were more than offset by the transferred Nora related gathering expenses and a pension related charge in the fourth quarter 2006.

Horizontal drilling continued to meet or exceed the company's expectations in the fourth quarter. Equitable drilled 38 horizontal wells. In Kentucky, Equitable drilled 26 Devonian shale wells, 5 targeting the Cleveland shale and 21 targeting the Huron shale. In West Virginia, the company drilled 10 Devonian shale wells, 8 targeting the Huron shale, 1 targeting the low pressure Marcellus shale in southern West Virginia and 1 targeting the Rhinestreet shale. In Virginia, the company drilled 2 horizontal wells in the Lower Huron shale, 1 in Nora and 1 in Roaring Fork. The production from the horizontal wells turned-in-line is consistent with the expected decline curve included in the company's analyst presentation.

Since January 1, 2008, the company has spud 17 horizontal wells, including its first Marcellus well in Pennsylvania, its first multi-lateral well in Kentucky and its first horizontal well in the Berea sand. The company is targeting drilling of between 250-300 horizontal wells in 2008.

During 2007, the company drilled 634 gross wells, consisting of 88 horizontal shale wells; 266 coal bed methane wells and 280 vertical wells. The drilling program developed 165 Bcfe, a 38% increase over 2006, mainly driven by the higher productivity of horizontal wells compared to vertical wells.

Production Guidance

In 2008, the total sales for the year are forecast to be 80-81 Bcfe. Daily sales volumes are expected to hit 235 MMcfe by year end, a 12% increase over the year end 2007 run rate.

Equitable Utilities

Equitable Utilities had operating income of $113.4 million for 2007, compared with $125.2 million for 2006, a 9.4% decrease. Net revenues increased $10.3 million or 3.7% over the previous year. Distribution net revenues were 4.5% higher as a result of increased throughput from weather which was 7% colder than 2006 but 9% warmer than the 30-year normal. The pipeline net operating revenues declined by $5.1 million in 2007, primarily attributable to a rate case settlement of $7.0 million in the first quarter of 2006, partially offset by higher rates in 2007. Marketing net revenues were $8.9 million higher than in 2006, benefiting from favorable storage asset optimization opportunities that were captured at a time of unusually high commodity price and volatility and settled in the first quarter 2007.

Total operating expenses for 2007 were 14.7% higher at $171.8 million, compared to $149.8 million in 2006. Expenses for the acquisition of Peoples Gas and Hope Gas, which was terminated in January 2008, totaled $21.0 million in 2007, including a $10.1 million write down of previously deferred transaction costs. In addition to transaction costs, increases in labor and legal expenses contributed to the year-over-year increase.

Operating income for the 2007 fourth quarter was $29.3 million, 36.9% lower than the $46.4 million earned in the year ago quarter. Net revenues were $84.7 million, $6.0 million lower than fourth quarter 2006 revenues of $90.7 million primarily due to a reduction in marketing net revenues. Lower marketing net revenues are explained by unusually favorable market conditions in the fourth quarter 2006 that persisted through the first quarter 2007. Operating expenses in the quarter increased $11.0 million, to $55.4 million in 2007. This increase includes the $10.1 million write-off of the deferred acquisition costs.

Other Business

Organizational Restructuring

In order to better reflect the drivers necessary to execute the company's growth strategy, Equitable is changing from a two segment financial reporting structure to a three segment financial reporting structure. Effective January 1, 2008, the company's segment financial reporting will be adjusted to reflect the three new segments: Equitable Production, Equitable Midstream and Equitable Distribution.

Equitable Production will drill and maintain wells, including both the horizontal drilling program and coal bed methane program, as well as explore for economic reserves of hydrocarbons in formations deeper than currently productive horizons.

Equitable Midstream encompasses physical infrastructure downstream of the wells including gathering pipelines, compressor stations, gas processing facilities, storage and FERC-regulated pipelines.

Equitable Distribution serves 275,000 residential, commercial and industrial customers in western Pennsylvania and West Virginia.

2007 Capital Expenditures

Equitable invested $805 million in capital projects during 2007. This included $322 million for well development, $394 million for Equitable Supply infrastructure, $88 million for Equitable Utilities, and $1 million for Corporate.

Hedging


    There was no change to the company's hedge position during the quarter.
The approximate volumes and prices of Equitable's hedges for 2008 through 2010
are:


                                            2008          2009          2010
    Swaps
    Total Volume (Bcfe)                       50            37            35
    Average Price per Mcfe (NYMEX)*        $4.62         $5.91         $5.96

    Collars
    Total Volume (Bcfe)                       10            10            10
    Average Floor Price per Mcfe (NYMEX)*  $7.61         $7.61         $7.61
    Average Cap Price per Mcfe (NYMEX)*   $11.27        $11.27        $11.27

    * The above price is based on a conversion rate of 1.05 MMbtu/Mcfe

Nora Field

During 2007, the company sold approximately 74 Bcfe of proved reserves and contributed its Nora gathering assets to a limited liability company, which is 50% owned by the company. Equitable recorded a gain of $154.5 million on the transaction, of which $6.7 million closed in the 2007 fourth quarter, and a loss of $28.4 million for the year as the company reduced its hedge position.

Operating Income

The company reports operating income by segment in this press release. Both interest and income taxes are controlled on a consolidated, corporate- wide basis, and are not allocated to the segments.

The following table reconciles operating income by segment as reported in this press release to the consolidated operating income reported in the company's financial statements:





                                     Three Months Ended      Year  Ended
                                         December 31,        December 31,
                                      2007        2006     2007       2006
    Operating income (thousands):
    Equitable Supply                 $75,342    $68,508   $263,545   $269,164
    Equitable Utilities               29,262     46,351    113,447    125,209
    Unallocated expenses             (10,672)    (5,247)   (65,319)   (21,850)
    Operating Income                 $93,932   $109,612   $311,673   $372,523

Unallocated expenses are primarily due to incentive compensation. For each period presented, the difference between equity in earnings of nonconsolidated investments as reported on the company's statements of consolidated income and on Equitable Supply's operational and financial report is the earnings from the company's ownership interest in Appalachian Natural Gas Trust. Other segment financial measures identified in this press release are reconciled to the most comparable financial measures calculated in accordance with GAAP on the attached operational and financial reports.

Equitable's teleconference with securities analysts, which begins at 10:30 a.m. Eastern Time today, will be broadcast live via Equitable's website, http://www.eqt.com and will be available for replay for a seven day period.

Equitable Resources is an integrated energy company with emphasis on Appalachian area natural gas production, gathering, processing, transmission and distribution. For information please visit http://www.eqt.com.

Equitable Resources management speaks to investors from time to time. Slides for these discussions will be available online via Equitable's website. The slides may be updated periodically.

Forward-Looking Statements

Disclosures in this press release contain forward-looking statements. Statements that do not relate strictly to historical or current facts are forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of the company and its subsidiaries, including guidance regarding the company's drilling programs and initiatives, the expected decline curve, infrastructure projects, production and sales volumes, capital expenditures, capital budget, financing plans, tax position and the company's move to three financial reporting segments. A variety of factors could cause the company's actual results to differ materially from the anticipated results or other expectations expressed in the company's forward-looking statements. The risks and uncertainties that may affect the operations, performance and results of the company's business and forward-looking statements include, but are not limited to, those set forth under Item 1A, "Risk Factors" of the company's most recently filed Form 10-K.

Any forward-looking statement speaks only as of the date on which such statement is made and the company does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.





                    EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
                  STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
                       (Thousands except per share amounts)

                                   Three Months Ended    Twelve Months Ended
                                      December 31,          December 31,
                                    2007      2006        2007        2006

    Operating revenues             $384,814  $353,783  $1,361,406  $1,267,910
    Cost of sales                   168,779   137,244     574,466     504,329
      Net operating revenues        216,035   216,539     786,940     763,581

    Operating expenses:
      Operation and maintenance      28,351    30,368     106,965     104,620
      Production                     14,189    15,099      62,273      62,471
      Exploration                       300       209         862         802
      Selling, general and
       administrative                51,387    35,292     195,365     125,951
      Office consolidation
       impairment charges                 -         -           -      (2,908)
      Depreciation, depletion and
       amortization                  27,876    25,959     109,802     100,122
        Total operating expenses    122,103   106,927     475,267     391,058

    Operating income                 93,932   109,612     311,673     372,523

    Gain on sale of assets, net       6,687         -     126,088           -

    Gain on sale of available-for-
     sale securities, net                 -         -       1,042           -

    Other income                      3,157       556       7,645       1,442

    Equity in earnings of
     nonconsolidated investments        901       140       3,099         260

    Interest expense                 12,065    12,366      47,669      48,494

    Income from continuing
     operations before income
     taxes                           92,612    97,942     401,878     325,731
    Income taxes                     32,015    29,980     144,395     109,706

    Income from continuing
     operations                      60,597    67,962     257,483     216,025
    Income from discontinued
     operations, net of tax of
     ($3,246) for the three
     and twelve months ended
     December 31, 2006                    -     4,261           -       4,261

    Net income                      $60,597   $72,223    $257,483    $220,286

    Earnings per share of common
     stock:
    Basic:
      Weighted average common
       shares outstanding           121,535   120,629     121,381     120,124

      Income from continuing
       operations                     $0.50     $0.56       $2.12       $1.79
      Income from discontinued
       operations                       -        0.04         -          0.04
      Net income                      $0.50     $0.60       $2.12       $1.83

    Diluted:
      Weighted average common
       shares outstanding           122,884   122,426     122,839     122,113

      Income from continuing
       operations                     $0.49     $0.56       $2.10       $1.77
      Income from discontinued
       operations                       -        0.03         -          0.03
      Net income                      $0.49     $0.59       $2.10       $1.80



                                 EQUITABLE SUPPLY
                         OPERATIONAL AND FINANCIAL REPORT

                                       Three Months Ended  Twelve Months Ended
                                          December 31,        December 31,
                                        2007      2006       2007      2006
      OPERATIONAL DATA

    Production:

    Natural gas and oil production
     (MMcfe)                            21,038    20,556     83,114    81,371
    Company usage, line loss (MMcfe)    (1,652)   (1,286)    (6,035)   (5,215)
    Total sales volumes (MMcfe)         19,386    19,270     77,079    76,156

    Average (well-head) sales price
     ($/Mcfe)                            $5.36     $4.88      $4.98     $4.83

    Lease operating expense excluding
     production taxes ($/Mcfe)           $0.27     $0.29      $0.31     $0.29
    Production taxes ($/Mcfe)            $0.40     $0.45      $0.44     $0.48
    Production depletion ($/Mcfe)        $0.70     $0.62      $0.70     $0.62

    Gathering:
    Gathered volumes (MMcfe)            20,748    28,319     94,210   108,592
    Average gathering fee ($/Mcfe)       $1.18     $1.04      $1.14     $1.02
    Gathering and compression expense
     ($/Mcfe)                            $0.50     $0.51      $0.49     $0.42
    Gathering and compression
     depreciation ($/Mcfe)               $0.19     $0.14      $0.17     $0.14

    (in thousands)
    Production operating income        $68,308   $59,492   $231,417  $231,849
    Gathering operating income           7,034     9,016     32,128    37,315
      Total operating income           $75,342   $68,508   $263,545  $269,164

    Production depletion               $14,755   $12,711    $58,264   $50,330
    Gathering and compression
     depreciation                        3,970     4,012     15,693    15,411
    Other depreciation, depletion and
     amortization                        1,657     1,700      5,903     4,759
      Total depreciation, depletion
       and amortization                $20,382   $18,423    $79,860   $70,500

    Capital expenditures (thousands)  $245,236  $130,987   $715,722  $335,948

      FINANCIAL DATA (Thousands)
    Production revenues               $106,914   $96,485   $394,583  $377,626
    Gathering revenues                  24,466    29,319    107,092   110,945
      Total operating revenues        $131,380  $125,804   $501,675  $488,571

    Operating expenses:
      Lease operating expense excluding
       production taxes                  5,687     5,868     25,361    23,818
      Production taxes                   8,501     9,231     36,912    38,653
      Exploration expense                  301       209        862       802
      Gathering and compression         10,332    14,313     45,844    45,860
      Selling, general and
       administrative                   10,835     9,252     49,291    39,774
      Depreciation, depletion and
       amortization                     20,382    18,423     79,860    70,500
        Total operating expenses        56,038    57,296    238,130   219,407

    Operating income                   $75,342   $68,508   $263,545  $269,164

    Equity in earnings of
     nonconsolidated investments          $864       $76     $2,949      $129
      Other income                      $2,596      $363     $6,467      $800



                               EQUITABLE UTILITIES
                        OPERATIONAL AND FINANCIAL REPORT

                                       Three Months Ended  Twelve Months Ended
                                          December 31,         December 31,
                                         2007      2006       2007      2006
      OPERATIONAL DATA
    Heating degree days (30-year
     average: Qtr: 2,070; YTD: 5,829)    1,802     1,750      5,332     4,976

    Residential sales and
     transportation volumes (MMcf)       6,959     6,846     23,494    21,014
    Commercial and industrial volumes
     (MMcf)                              6,430     5,982     25,971    23,841
        Total throughput (MMcf) -
         Distribution                   13,389    12,828     49,465    44,855

    Net operating revenues
     (thousands):
      Distribution
        Residential                    $26,765   $27,443    $99,050   $92,497
        Commercial & industrial         11,355    12,825     42,558    42,519
        Other                            2,300     2,628      8,192     8,319
    Total Distribution                  40,420    42,896    149,800   143,335
    Pipeline                            20,858    18,272     67,517    72,586
    Marketing                           23,377    29,567     67,948    59,089
        Total net operating revenues   $84,655   $90,735   $285,265  $275,010

    Operating income (thousands):
      Distribution (regulated)            $484    $9,279    $24,071   $34,807
      Pipeline (regulated)               7,790     8,297     26,153    33,240
      Marketing                         20,988    28,775     63,223    57,162
        Total operating income         $29,262   $46,351   $113,447  $125,209

    Capital expenditures (thousands)   $26,657   $19,238    $87,761   $64,332

      FINANCIAL DATA (Thousands)
    Distribution revenues (regulated) $136,070  $122,535   $455,506  $445,168
    Pipeline revenues (regulated)       20,484    18,592     68,547    74,010
    Marketing revenues                 132,728   117,435    445,153   380,149
    Less: Intrasegment revenues        (15,678)  (14,726)   (52,385)  (56,163)
      Total operating revenues         273,604   243,836    916,821   843,164

    Purchased gas costs                188,949   153,101    631,556   568,154
      Net operating revenues            84,655    90,735    285,265   275,010

    Operating expenses:
      Operating and maintenance         17,897    15,892     61,135    58,186
      Selling, general and
       administrative                   30,378    21,241     82,105    65,280
      Office consolidation impairment
       charges                               -         -          -    (2,396)
      Depreciation, depletion and
       amortization                      7,118     7,251     28,578    28,731
        Total operating expenses        55,393    44,384    171,818   149,801

    Operating income                   $29,262   $46,351   $113,447  $125,209

    Other income                          $561      $193     $1,178      $642

SOURCE Equitable Resources, Inc.