Brunson WhiteVP & Chief Information Officer

At Energen, Better Asset Management Leads to Better Customer Service

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ENERGEN CORPORATION

Energen Corporation, headquartered in Birmingham, Alabama, traces its beginning to October 14, 1852. On that date, John Jeffrey and Company of Cincinnati, Ohio received a franchise from the City of Montgomery to provide street lighting using manufactured gas. Montgomery Gas Light Company purchased the franchise in 1853 and, a year later, the first street gaslights were in operation.

Since 1854, the company has experienced mergers, acquisitions, divestitures and name changes.

In 1937, Southern Natural Gas Company organized the utility into Alabama Gas Company and in 1948 merged it with Birmingham Gas Company to form Alabama Gas Corporation. The company spun off from Southern Natural Company in 1953, becoming an independent and publicly traded company.

The company formed the holding company Alagasco, Inc. in 1974 to position itself for the future. Alabama Gas Corporation was its primary subsidiary.

The holding company became Energen Corporation in 1985 and today, Energen has two major subsidiaries: Alagasco, its natural gas utility, and Energen Resources, its oil and gas exploration and production company.

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ENERGEN CORPORATION

Alagasco is the largest natural gas distributor in the state.

We serve an average of 463,000 customers in nearly 200 Alabama cities, towns and communities.

We have more than 1,000 employees at work in our seven operating divisions –Anniston, Birmingham, Gadsden, Montgomery, Opelika, Selma and Tuscaloosa – and smaller district offices in the surrounding areas.

SAP Integration

Pre - SAP

Manual Processes

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Pre-SAP

Alagasco used cumbersome manual processes for projects

Operations also used manual processes to manage the installation of main and service lines

Mainframe system was used to manage inventory

Engineering

creates project

documentationDocumentation is

sent through interoffice mail to management for

review and approval

Management forwards documents through interoffice

mail to accounting for allocation of budget

dollars

Accounting returns approval to engineering

Engineering creates requests for materials

Materials are approved and PO’s

are created

Materials are received and work

begins

Engineering collects costs for project and collects completion data for accounting

Accounting creates new asset in

mainframe system

Depreciation begins for capital investment

SAP Integration

Manual Processes

Pre - SAP

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Inspections and repairs to natural gas delivery system

Installation of new main and service lines

Reporting for regulatory compliance

Budgets and approvals for capital projects were manually processed

Manual Processes

Manual Processes

SAP Integration

Pre - SAP

Project Installation

Initial SAP Implementation

March 2002

Project start

Jan 2003

PM/PS, MM, FI/CO Go Live

April2004

HCM Go Live

Time entry is applied

directly to work orders

August 2004

Strategy for Mobile

deploymentGIS system is

rolled out

Sept 2004

Training for GIS is deployed

March 2005

2006 onwards

TODAY

**Customer billing continues to be managed with mainframe legacy system**

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Integration of PM/PS with MM module creates automatic purchase requisitions for materials and services

Requisitions are routed for approval using SAP workflows

Workflows allow for proper business controls and compliance with Sarbanes Oxley requirements

SAP Integration

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andPlant Maintenance

Areas of Utilization

CapitalProjects

BudgetMonitoring

Acquisition ofStandard Assets

MaterialsManagement

MaintenancePlans

Plant MaintenanceWork Orders

FleetMaintenance

Capital WorkOrders

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Capital projects and the installation of mains and services are vital to the utility business

Project approval time was reduced from four to eight weeks to days or even hours

SAP workflow with Outlook notifications help users process project approvals in a timely and proficient manner

Capital Projects

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Managing capital projects was a cumbersome manual process

SAP’s availability control is used to notify appropriate personnel of budget overrun

Management receives Outlook notification when budget allocations are exceeded according to the limits set through configuration

Budget Monitoring

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Work Orders are linked directly to project settlement rules allowing for automatic calculation of budget dollars used or committed

Due to constant monitoring of budget dollars spent the company is able to evaluate new opportunities and make informed decisions related to new growth

Capital Work Orders

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Alagasco utilizes the project system to acquire all standard business assets including new facilities, hardware, software and office furnishings

Availability control is used for these projects

Assets are automatically created for these purchases and appropriate depreciation schedules are created

Acquisition of Standard Assets

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Work Orders are used as cost and information collectors for O&M and capital work

Standard Reporting is used to monitor costs and future commitments

Services for Objects feature is used to link appropriate documentation to work orders

Plant Maintenance Work Orders

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Materials Management

Materials module allows users to view materials across all locations and transfer materials to areas with the most signification need

Jobs are not stopped because of material shortages

Alagasco is able to manage inventory storage costs and maintain proper inventory levels

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Maintenance Plans

Maintenance plans are used to generate notifications for inspections of various components of the delivery system

Valves, border stations, district regulators, industrial meter installations are maintained with this system

Pipe condition of delivery mains must be reported to regulatory agencies and proof of compliance is provided by standard SAP reports

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Fleet Maintenance

Standing work orders have been created to collect all maintenance costs for fleet equipment and vehicles

Management has the ability to review costs and make informed decisions regarding the replacement of fleet equipment

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SAP Integration

All modules are integrated allowing users to review real time information regarding business operations

Integration allows users to navigate within the

system to receive information

Users navigate from work orders to requisitions to

PO’s to financial documents. Users are

also able to review financial reports and

navigate to work orders

PM/PSMM

FI/CO

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Project Systems and Plant Maintenance

SAP allows for quicker installation of mains and services, which results in more customers.

SAP implementation has allowed Alagasco to examine in depth the process of business operations

New focus has been placed on reviewing the way we do business and making changes that enhance our return to our shareholders

Added value to Alagasco