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 and a commodity price-related write-down of natural gas properties. 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 $15.4 tax)

Non-cash write-down of natural gas properties (net of $8.1 tax)

Adjusted Net Income (Non-GAAP)

Energen Resources Net Income ($ in millions)

Net Income (GAAP)

Non-cash mark-to-market losses (net of $15.4 tax)

Non-cash write-down of natural gas properties (net of $8.1 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. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a Non-GAAP financial measure. Energen believes this measure allows analysts and investors to understand the financial performance of the company by computing earnings from core business operations, without including the effects of capital structure, tax rates and depreciation. Further, this measure is useful in comparing profitability between the company and other oil and gas producing companies. Adjusted EBITA excludes certain non-cash mark-to-market derivative financial instruments and a commodity price-related write-down of natural gas properties.

Reconciliation To GAAP Information

($ in millions)

Consolidated Net Income (GAAP)

Interest expense

Income tax expense

Depreciation, depletion and amortization

EBITDA (Non-GAAP)

Adjustment for asset impairment

Adjustment for mark-to-market losses

Consolidated Adjusted EBITDA (Non-GAAP)

Reconciliation To GAAP Information

($ in millions)

Energen Resources Net Income (GAAP)

Interest expense

Income tax expense

Depreciation, depletion and amortization

Energen Resources EBITDA (Non-GAAP)

Adjustment for asset impairment

Adjustment for mark-to-market losses

Energen Resources Adjusted EBITDA (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. 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.

Reconciliation To GAAP Information

($ in millions)

Consolidated Net Income (Before asset impairment)

Asset impairment

Consolidated Net Income (GAAP)

Depreciation, depletion and amortization (Including asset impairment)

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)

Reconciliation To GAAP Information

($ in millions)

Net Cash Provided by Operating Activities (GAAP)

Changes in assets and liabilities and other adjustments

After-tax Cash Flow (Non-GAAP)

Less: AGC cash flows from operations and other

Adj. Cash Flows from Operations Excluding Alagasco (Non-GAAP)

(e) This estimate is a “forward-looking statement” as defined by the Securities and Exchange Commission. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A discussion of risks and uncertainties, which could affect future results of Energen and its subsidiaries, is included in the Company’s periodic reports filed with the Securities and Exchange Commission.