Higher Commodity Prices, Increased Production, and Gain on Sale Drive 12.5% Increase in Energen's First Quarter EPS

Business Wire, April 23, 2008

Company Raises Earnings Guidance Range for 2008, 2009

BIRMINGHAM, Ala. -- Energen Corporation (NYSE: EGN) announced at today's Annual Meeting of Shareholders that its first quarter earnings of $116.7 million, or $1.62 per diluted share, rose more than 12 percent over the same period last year on the strength of higher commodity prices, a $6.4 million after-tax gain on the sale of a small Permian Basin property and a 3 percent increase in production.

"We are very pleased with our progress in the first quarter of 2008 and excited about our prospects for the future," James McManus, Energen's chairman and chief executive officer, told shareholders at the energy company's Birmingham headquarters.

"As I'm sure you are well aware, oil and gas market prices have surged. We have capitalized on this upward momentum over the past six months by strengthening our hedge position for 2009 and 2010 production; in this way, we are helping lock in earnings and cash flow growth for the next several years," McManus said.

"In recognition of the market strength of commodity prices, we also are raising the prices we assume for our unhedged production in our earnings models; this, in turn, is leading us to increase our earnings guidance ranges for 2008 and 2009 by 20 cents per diluted share," McManus added. "Energen's new guidance for 2008 earnings is $4.15-$4.55 per diluted share; and we estimate that 2009 earnings -- stimulated by organic production growth of some 6-8 percent -- will range from $4.65-$5.05 per diluted share.

"Our new price assumptions are still well below current strip pricing and leave the door wide open to commodity price-driven earnings upside," McManus added. "Based on the estimated sensitivity of our earnings to commodity price changes - data we routinely incorporate with earnings guidance - it is clear that, at current strip prices for the rest of 2008 and for 2009, Energen could easily generate additional price-driven earnings of 35 cents per diluted share in 2008 and more than 75 cents per diluted share in 2009. (Calculations based on average NYMEX natural gas prices of $11 per Mcfe for the remainder of 2008 and $10.50 per Mcfe for 2009, and on average NYMEX oil prices of $115 per barrel for the remainder of 2008 and $110 per barrel for 2009).

"Energen continues to benefit from the accelerated development of our unproved reserve base, and the annual review of our year-end reserves once again supported 1.9 trillion cubic feet equivalent (Tcfe) of probable and possible reserves in our existing areas of operation," McManus said. "This is an encouraging development given that approximately 125 billion cubic feet equivalent (Bcfe) of our reserves were reclassified as 'proved' in 2007. In addition, these numbers have been adjusted downward to reflect the sale just last month of a small Permian Basin oil property with an estimated 65 Bcfe of probable and possible reserves.

"Energen Resources Corporation, our oil and gas exploration and production unit, is continuing to focus on ways to extend the accelerated pace of drilling on our properties to bring the remaining unproved reserves to production as quickly as possible," McManus said.

"Meanwhile, our net acreage position in multiple Alabama shale plays has grown to approximately 315,000 acres, and drilling activities continue on our first three test wells in Bibb and Greene counties," he added. "As you know, we do not plan to disclose results on a well-by-well basis; rather, our plans are to work as thoroughly and expediently as possible and to announce our findings when sufficient data has been gathered."

FIRST QUARTER 2008 RESULTS

For the three months ended March 31, 2008, Energen's net income totaled $116.7 million, or $1.62 per diluted share, and compares with first quarter 2007 net income of $103.9 million, or $1.44 per diluted share.

Energen Resources Corporation

Energen Resources' net income for the first three months of 2008 totaled $72.5 million and compared with $63.2 million in the same period last year. This increase largely reflects the impact of higher average realized sales prices for Energen Resources' oil and natural gas liquids (NGL) production, a $6.4 million gain on the sale of 4.4 Bcfe of proved oil reserves in the Permian Basin, and a 3 percent increase in production.

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Per-unit lease operating expense (LOE) increased to $2.44 per thousand cubic feet equivalent (Mcfe) from $1.99 per Mcfe in the same period a year ago. This 23 percent increase largely was due to a 36 percent rise in commodity price-driven production taxes and to increased compression, increased workover expense, weather-related road maintenance, and increased environmental compliance expense.

Depreciation, depletion and amortization expense (DD&A) per unit in the first quarter of 2008 increased 11 percent over the same period last year to $1.21 per Mcfe largely due to higher development costs.

Alabama Gas Corporation

Energen's natural gas utility, Alabama Gas Corporation (Alagasco), generated net income of $43.7 million in the first quarter of 2008 as compared with $40.3 million in the same period a year ago. This increase primarily was due to the utility's earning on a higher level of equity; a decrease in customer usage was largely offset by the timing of operations and maintenance expense.