Energen Increases 2006 Hedge Position; Raises Earnings Guidance Range to $2.55-$2.75 per Diluted Share

Business Wire, June 6, 2005

BIRMINGHAM, Ala. -- Energen Corporation (NYSE:EGN) announced today that it has added to its 2006 hedge position and, as a result, is raising its earnings guidance for 2006 to a new range of $2.55-$2.75 per diluted share. (The Company's prior guidance range, adjusted for the Company's 2-for-1 stock split on June 1, was $2.50-$2.60 per diluted share.)

Energen Adds 2006 Hedges

The Company has hedged an additional 5 billion cubic feet (Bcf) of its 2006 natural gas production at a NYMEX price of $7.50 per thousand cubic feet (Mcf) and 360,000 barrels of its 2006 sour oil production at a NYMEX-equivalent price of $55.21 per barrel. The new gas and oil hedges are spread equally throughout the year.

Energen's oil and gas acquisition and development subsidiary, Energen Resources Corporation, utilizes derivative hedge instruments to help mitigate the negative earnings impact of commodity price volatility.

Energen Resources' total natural gas hedge position for 2006 now stands at approximately 22.7 Bcf at an average NYMEX-equivalent price of $6.99 per Mcf; the Company's total oil hedge position for 2006 is now approximately 1.8 million barrels (MMBbl) at an average NYMEX-equivalent price of $47.85 per barrel.

Energen Raises 2006 Earnings Guidance

With additional uncertainty associated with commodity prices removed from Energen's earnings outlook for 2006, the Company raised its guidance for the year to a range of $2.55-$2.75 per diluted share.

Embedded in Energen's 2006 earnings guidance is the assumption that average NYMEX prices applicable to its unhedged natural gas and oil production will average $6.15 per Mcf and $35 per barrel, respectively. The assumed average price for unhedged natural gas liquids (NGL) production in 2006 is approximately 58 cents per gallon.

"Our 2006 price assumptions leave a lot of potential for commodity price-driven earnings upside given that current 2006 strip prices are approximately $56 per barrel for oil and $7.50 per Mcf for natural gas," said Mike Warren, Energen's chairman and chief executive officer.

Also included in the Company's 2006 guidance is an estimated 8 cents per diluted share from unidentified oil and gas property acquisitions of approximately $200 million each in the fourth quarters of 2005 and 2006.

Energen Resources' total current hedge position with respect to its estimated 2006 production is as follows:

NYMEX-
                               Estimated 2006                  equiv.
    Commodity     Hedge Vols.     Production       % Hedged     price
----------------------------------------------------------------------
                                 65.3      58.4                 $6.99
Natural Gas        22.7 Bcf     Bcf(1)    Bcf(2) 35%(1) 39%(2) per Mcf
----------------------------------------------------------------------
                                                               $47.85
                                3,800     3,450                   per
Oil               1,800 MBbl   MBbl(1)   MBbl(2) 48%(1) 52%(2)  barrel
----------------------------------------------------------------------
                                                                $0.56
                                 86.6      79.7                   per
NGL                30.2 MMgal  Mgal(1)  MMgal(2) 35%(1) 38%(2)  gallon
----------------------------------------------------------------------

(1) With unidentified 4th quarter acquisition in 2005 and 2006

(2) Without unidentified 4th quarter acquisition in 2005 and 2006


Energen Resources' 2006 natural gas hedge position by hedge type is as
follows:


                                                            Price/Mcf
                                              Assumed Basis   (NYMEX
           Hedge Type            Volumes (Bcf)  Difference    equiv)
----------------------------------------------------------------------
San Juan Basin-specific                  17.6         $0.80     $6.84
----------------------------------------------------------------------
NYMEX Hedges                              5.0            NA     $7.50
----------------------------------------------------------------------

Energen Resources' 2006 oil hedge position by hedge type is as
follows:

                                                          Price/Barrel
                              Volumes   Assumed Sour Oil     (NYMEX
         Hedge Type            (MBbl)      Difference        equiv)
----------------------------------------------------------------------
NYMEX Hedges                       360               --       $37.12
----------------------------------------------------------------------
Sour Oil (WTS)                   1,440            $4.11       $50.54
----------------------------------------------------------------------

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