Equitable Resources Inc. Announces $120 Million in Charges and Cost Savings

Pittsburgh-based Equitable Resources Inc. has revealed plans to record significant charges totaling $120 million, primarily to cover severance costs and property write-downs. The company will take a one-time, pretax charge of $60 million in the fourth quarter, accounting for staff reductions, restructuring, and debt extinguishment. Additionally, Equitable will record a noncash expense of approximately $60 million to reflect the lower value of certain oil and gas properties due to depressed wellhead prices. These measures aim to reduce annual operating expenses by around $20 million and align the company's operations with the current market conditions.

Key Takeaways:

• Equitable Resources Inc. will record charges totaling $120 million, broken down into a $60 million pretax charge for severance and restructuring costs, and a $60 million noncash expense for property write-downs.
• The $60 million pretax charge includes $13 million ($8 million after-tax) for the early extinguishment of higher-cost long-term debt.
• The company expects to reduce annual operating expenses by about $20 million through cost-saving measures, lower interest charges, and reduced depreciation and depletion expense.
• Equitable will transfer corporate activities to business units, reduce corporate staff positions, and streamline management information systems to cut overhead costs.
• The company anticipates a total employee count of fewer than 1,600 by the first of the year, marking a 20% reduction from mid-1998.

Statistics:

• $120 million: Total charges recorded by Equitable Resources Inc.
• $60 million: Pretax charge for severance and restructuring costs
• $13 million: After-tax amount for the early extinguishment of higher-cost long-term debt
• $60 million: Noncash expense for property write-downs
• $20 million: Anticipated annual reduction in operational expenses
• 1,600: Projected total employee count for the first of the year (a 20% reduction from mid-1998)

Sources:

• Equitable Resources Inc. news release (no date provided)