Non-GAAP Financial Measures

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. Adjusted Net Income is a Non-GAAP financial measure which excludes certain non-cash mark-to-market derivative financial instruments in current periods and certain non-cash leasehold write-offs in the prior periods. Energen believes that excluding the impact of these items is more useful to analysts and investors in comparing the results of operations and operational trends between reporting periods and relative to other oil and gas producing companies.

Consolidated Net Income ($ in millions except per share data)

Net Income (GAAP)

Non-cash mark-to-market losses (net of $14.2 tax)

Adjusted Net Income (Non-GAAP)

Consolidated Net Income ($ in millions except per share data)

Net Income (GAAP)

Non-cash leasehold write-off (net of $14.9 tax)

Adjusted Net Income (Non-GAAP)

Consolidated Net Income ($ in millions except per share data)

Net Income (GAAP)

Non-cash mark-to-market losses (net of $34.2 tax)

Adjusted Net Income (Non-GAAP)

Non-GAAP Financial Measures

The United States Securities and Exchange Commission requires public companies to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. Adjusted Net Income is a Non-GAAP financial measure which excludes certain non-cash mark-to-market derivative financial instruments in current periods and certain non-cash leasehold write-offs in the prior periods. Energen believes that excluding the impact of these items is more useful to analysts and investors in comparing the results of operations and operational trends between reporting periods and relative to other oil and gas producing companies.

Energen Resources Income ($ in millions)

Net Income (GAAP)

Non-cash mark-to-market losses (net of $34.2 and $14.2 tax)

Adjusted Net Income (Non-GAAP)

Energen Resources Income ($ in millions)

Net Income (GAAP)

Non-cash leasehold write-off (net of $14.9 tax)

Adjusted Net Income (Non-GAAP)

Non-GAAP Financial Measures

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. Net Cash Provided by Operating Activities Before Changes in Operating Assets and Liabilities is a Non-GAAP financial measure. Energen believes this measure allows analysts and investors to understand the operating cash flows of the company before the impact of changes in working capital. This measure is useful in understanding cash available to fund the company’s capital expenditures, dividends, debt reduction and other investments.

Net Income (GAAP)

Depreciation, depletion and amortization

Deferred income taxes, net

Other adjustments to reconcile net income to net cash provided by operating activities

Net Cash Provided by Operating Activities Before Changes in Operating Assets and Liabilities (Non-GAAP)

Changes in assets and liabilities

Net Cash Provided by Operating Activities (GAAP)

Non-GAAP Financial Measures

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. After-tax Cash Flows is a Non-GAAP financial measure. Energen believes after-tax cash flows are relevant because they are a measure of cash available to fund the Company’s capital expenditures, dividends, debt reduction, and other investments.

Net Income (GAAP)

Depreciation, depletion and amortization

Deferred income taxes, net

After-tax Cash Flows (Non-GAAP)

Changes in assets and liabilities and other adjustments

Net Cash Provided by Operating Activities (GAAP)