##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934For the fiscal
year ended September 30, 2005
 o
    
    Transition report pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934For the
transition period from ____ to ____
 Commission File
Number 0-29604
 EnergySouth, Inc.
  Alabama
    
    58-2358943(State or other Jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 2828 Dauphin Street, Mobile, Alabama
    
    36606(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code
    
    (251)450-4774
 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 Title of each class
    
    Name of each exchange
on which registeredNone
    
    None
 SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
 (Title of Class)
 o þ
 o þ
 þ o
 o
 þ o
 o þ




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TABLE OF CONTENTS  PART IItem 1. BusinessItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersItem 4a. Executive Officers of the RegistrantPART IIItem 5. Market for the Registrants Common Stock Equity and RelatedItem 6  EnergySouth, Inc.    Selected Financial DataItem 7. Managements Discussion and Analysis of Results of Financial Condition and Results of OperationItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresPART IIIItem 10 Directors, Executive Officers, and Control Persons of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and ManagementItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees and ServicesPART IVItem 15. Exhibits, Financial Statement SchedulesSignaturesEXHIBIT INDEXStorage Service AgreementTermination AgreementRevolving Credit AgreementSubsidiariesConsent of Deloitte & Touche LLPCertifications Pursuant to Section 302 - CEOCertifications Pursuant to Section 302 - CFOCertification Pursuant to Section 906 - CEOCertification Pursuant to Section 906 - CFO    Table of Contents  
 PART I
 
 Item 1 Business
 General
       1




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##### Table of Contents



Business Segments
  
    
    Natural Gas Distribution  The Natural Gas Distribution segment is
actively engaged in the distribution and transportation of natural
gas to residential, commercial and industrial customers in
Southwest Alabama through Mobile Gas and SGT.
    
    Natural Gas Storage  The Natural Gas Storage segment provides for
the underground storage of natural gas and transportation services
through the operations of Bay Gas and Storage. The storage
operations are located in Southwest Alabama.
    
    Other  Includes merchandising, financing, and other
energy-related services which are provided through Mobile Gas, and
Services, respectively, and are aggregated with the corporate
operations of EnergySouth, the holding company.
  Customers
    2




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Gas Supply
   Gas Storage
   3




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Competition
 Gas Distribution Competition
   4




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Gas Storage Competition
 Rates and Regulation
    5




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force majeure
  6




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Seasonal Nature of Business
  7




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Environmental Issues
    Employees
  Available Information
  8




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Item 2. Properties
      
 Item 3 Legal Proceedings
  
 Item 4 Submission of Matters to a Vote of Security Holders
  9




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Item 4a. Executive Officers of the Registrant
    Business ExperienceName, Age, and Position
    
    During Past 5 YearsW. G. Coffeen, III, 59
    
    Appointed in December 2004;Senior Vice President of Corporate
    
    Previously: Senior Vice President ofDevelopment  EnergySouth, Inc.
    
    Operations and Marketing -EnergySouth, Inc. (2000 - 2004);Vice President of CorporateDevelopment and Planning -EnergySouth, Inc. (1998 -2000)
 10




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Business ExperienceName, Age, and Position
    
    During Past 5 YearsSenior Vice President of Corporate Development
    
    Appointed in December 2004; Mobile Gas Service Corporation;
    
    Previously: Senior Vice President ofDirector and President  EnergySouth Services,
    
    Operations and Marketing - Mobile GasInc.; Director and President  MGS Marketing
    
    Service Corporation  (2000 - 2004);Services, Inc.
    
    Vice President of Corporate Developmentand Planning - Mobile Gas ServiceCorporation (1998 -2000); Vice President- MGS Marketing Services, Inc.;Vice President - MGS StorageServices, Inc. (1998 - 2000)Charles P. Huffman, 52
    
    Appointed in December 2000;Senior Vice President and Chief Financial Officer
    
    Previously: Vice President, Chief- EnergySouth, Inc.
    
    Financial Officer, and Treasurer -EnergySouth, Inc. (1998 - 2001)Senior Vice President and Chief Financial Officer
    
    Appointed in December 2000;- Mobile Gas Service Corporation; Vice
    
    Previously: Vice President, ChiefPresident and Chief Financial Officer -
    
    Financial Officer, Treasurer, andEnergySouth Services, Inc.; Director, Vice
    
    Assistant Secretary - Mobile GasPresident and Chief Financial Officer  MGS
    
    Service Corporation; ViceMarketing Services, Inc.; Director, Vice President
    
    President/Treasurer - EnergySouthand Chief Financial Officer  MGS Storage
    
    Services, Inc.; Director/ViceServices, Inc.
    
    President/Treasurer - MGS StorageServices, Inc.; Director/VicePresident/Treasurer - MGSMarketing Services, Inc. (1998 -2001)G. Edgar Downing, Jr., 49 *
    
    Appointed in December 2005Senior Vice President, Secretary and
    
    Previously: Vice President, SecretaryGeneral Counsel  EnergySouth, Inc.;
    
    and General Counsel - EnergySouth, Inc.(1998 - 2005)Senior Vice President, Secretary and
    
    Appointed in December 2005; Previously:General Counsel  Mobile Gas Service
    
    Secretary, General Counsel and ViceCorporation; Director, Vice President and
    
    President of Administration - Mobile GasSecretary  EnergySouth Services, Inc,; Director,
    
    Service Corporation; Director, ViceVice President and Secretary  EnergySouth
    
    President and Secretary - EnergySouthServices, Inc.; Vice President and Secretary -
    
    Services, Inc,; Director, ViceMGS Marketing Services, Inc.; Director, Vice
    
    President and Secretary - EnergySouthPresident and Secretary  MGS Storage
    
    Services, Inc.; Vice President and Secretary -Services, Inc.
    
    MGS Marketing Services, Inc.; Director, VicePresident and Secretary - MGS StorageServices, Inc.
 11




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##### Table of Contents



Business ExperienceName, Age, and Position
    
    During Past 5 YearsSusan P. Stringer, 44
    
    Appointed in December 2000Vice President and Controller  EnergySouth,Inc.Vice President and Controller  Mobile Gas
    
    Appointed in December 2000;Service Corporation
    
    Previously: Director - FinancialReporting - Mobile Gas ServiceCorporation (2000); Manager -Financial Reporting - Mobile GasService Corporation (1999 - 2000);Accounting Manager - Mobile GasService Corporation (1998 - 1999);LaBarron N. McClendon, 41
    
    Appointed in December 2001Vice President Human Resources -EnergySouth, Inc.Vice President Human Resources  Mobile Gas
    
    Appointed December 2001;Service Corporation
    
    Previously: Director HumanResources - Mobile Gas ServiceCorporation (1999 - 2001); ManagerHuman Resources - Mobile GasService Corporation (1998 - 1999);Daniel T. Ford, 39
    
    Appointed in June 2002Treasurer  EnergySouth, Inc.Treasurer  Mobile Gas Service Corporation;
    
    Appointed June 2002; Previously:Treasurer  EnergySouth Services, Inc.;
    
    Director Rates and Analysis - MobileTreasurer  MGS Marketing Services, Inc.;
    
    Gas Service Corporation (2000 -Treasurer  MGS Storage Services, Inc.
    
    2002); Manager Rates and Analysis- Mobile Gas Service Corporation(1997 - 2000)
  *
    
    Mr. Downing is the son-in-law of Gaylord C.
Lyon, a Director of the Company 12




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PART II
 
 Item 5 Market for the Registrants Common Stock Equity and Related Stockholder Matters
  Per ShareDividends Declared
    
    
    Closing Price RangeFiscal YearQuarter Ended
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004High
    
    
    Low
    
    
    High
    
    
    LowDecember 31
    
    $
    .200
    
    
    $
    .190
    
    
    $
    29.060
    
    
    $
    26.450
    
    
    $
    23.680
    
    
    $
    20.850March 31
    
    
    .200
    
    
    
    .190
    
    
    
    29.840
    
    
    
    27.070
    
    
    
    23.900
    
    
    
    21.750June 30
    
    
    .215
    
    
    
    .200
    
    
    
    28.660
    
    
    
    24.650
    
    
    
    26.490
    
    
    
    22.580September 30
    
    
    .215
    
    
    
    .200
    
    
    
    28.650
    
    
    
    25.820
    
    
    
    28.750
    
    
    
    25.490
   13




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Item 6  EnergySouth, Inc.  Selected Financial Data
 FINANCIAL SUMMARY
 Years Ended September 30,
    
    2005
    
    
    2004
    
    
    2003SELECTED FINANCIAL DATA
(in thousands, except per share data)Gas Revenues
    
    $
    119,987
    
    
    $
    111,488
    
    
    $
    95,150Merchandise Sales
    
    
    3,263
    
    
    
    3,029
    
    
    
    3,259Other
    
    
    1,356
    
    
    
    1,455
    
    
    
    1,206Total Operating Revenues
    
    $
    124,606
    
    
    $
    115,972
    
    
    $
    99,615Income Before Cumulative Effect of Changes
in Accounting Principles
    
    $
    13,841
    
    
    $
    12,568
    
    
    $
    11,135Cumulative Effect of Changes in Accounting PrinciplesNet Income
    
    $
    13,841
    
    
    $
    12,568
    
    
    $
    11,135Preferred Stock DividendsEarnings Applicable to Common Stock
    
    $
    13,841
    
    
    $
    12,568
    
    
    $
    11,135Cash Dividends Per Share of Common Stock (1)
    
    $
    0.83
    
    
    $
    0.78
    
    
    $
    0.74Basic Earnings Per Share of Common Stock (1):Income Before Cumulative Effect of Changes in
Accounting Principles
    
    $
    1.76
    
    
    $
    1.62
    
    
    $
    1.47Net Income (1)
    
    $
    1.76
    
    
    $
    1.62
    
    
    $
    1.47Diluted Earnings Per Share of Common Stock (1):Income Before Cumulative Effect of Changes in
Accounting Principles
    
    $
    1.74
    
    
    $
    1.60
    
    
    $
    1.45Net Income (1)
    
    $
    1.74
    
    
    $
    1.60
    
    
    $
    1.45Average Common Shares Outstanding (1):Basic (1)
    
    
    7,854
    
    
    
    7,764
    
    
    
    7,599Diluted (1)
    
    
    7,950
    
    
    
    7,860
    
    
    
    7,686Total Assets
    
    $
    252,459
    
    
    $
    242,304
    
    
    $
    236,888Long-Term Debt
    
    $
    77,579
    
    
    $
    84,692
    
    
    $
    92,640STATISTICALGas Revenue (in thousands):Sales:Residential
    
    $
    66,701
    
    
    $
    64,283
    
    
    $
    54,470Commercial and Industrial  Small
    
    
    19,717
    
    
    
    17,100
    
    
    
    13,795Commercial and Industrial  Large
    
    
    10,502
    
    
    
    8,696
    
    
    
    8,101Transportation
    
    
    9,920
    
    
    
    9,799
    
    
    
    10,405Storage (other than intercompany)
    
    
    12,383
    
    
    
    10,805
    
    
    
    7,401Other
    
    
    764
    
    
    
    805
    
    
    
    978Total
    
    $
    119,987
    
    
    $
    111,488
    
    
    $
    95,150Delivery to Customers (in thousand therms):Gas Sales:Residential
    
    
    36,335
    
    
    
    42,546
    
    
    
    44,617Commercial and Industrial  Small
    
    
    13,314
    
    
    
    13,709
    
    
    
    13,664Commercial and Industrial  Large
    
    
    9,165
    
    
    
    8,943
    
    
    
    10,463Transportation
    
    
    646,564
    
    
    
    695,561
    
    
    
    759,936Total
    
    
    705,378
    
    
    
    760,759
    
    
    
    828,680Customers Billed (peak month):Residential
    
    
    91,343
    
    
    
    92,537
    
    
    
    93,318Commercial and Industrial  Small
    
    
    5,035
    
    
    
    5,143
    
    
    
    5,111Commercial and Industrial  Large
    
    
    82
    
    
    
    77
    
    
    
    78Transportation
    
    
    42
    
    
    
    41
    
    
    
    43Total
    
    
    96,502
    
    
    
    97,798
    
    
    
    98,550Degree Days (2)
    
    
    1,400
    
    
    
    1,619
    
    
    
    1,773NUMBER OF EMPLOYEES (END OF PERIOD)
    
    
    261
    
    
    
    265
    
    
    
    285
 
 Note: (1)
    
    All references to number of shares and per share amounts have been restated to reflect the three-for-two
conversion of Mobile Gas common stock into EnergySouth, Inc. common stock effective February 2, 1998
and the three-for-two stock split effective September 2, 2004.Note: (2)
    
    The number of degrees that the daily mean temperature falls below 65 degrees F. The Companys rates
were designed assuming annual normal degree days of 1,640 beginning December 1, 1995 and an annual
normal of 1,695 for prior periods. 14




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2002
    
    
    2001
    
    
    2000
    
    
    1999
    
    
    1998
    
    
    1997
    
    
    1996$
    81,560
    
    
    $
    103,424
    
    
    $
    69,714
    
    
    $
    63,889
    
    
    $
    70,740
    
    
    $
    69,622
    
    
    $
    68,3343,499
    
    
    
    2,966
    
    
    
    2,913
    
    
    
    2,827
    
    
    
    2,920
    
    
    
    2,678
    
    
    
    2,6741,360
    
    
    
    1,369
    
    
    
    1,470
    
    
    
    1,344
    
    
    
    1,329
    
    
    
    1,281
    
    
    
    1,224$
    86,419
    
    
    $
    107,759
    
    
    $
    74,097
    
    
    $
    68,060
    
    
    $
    74,989
    
    
    $
    73,581
    
    
    $
    72,232$
    10,231
    
    
    $
    6,138
    
    
    $
    8,792
    
    
    $
    8,624
    
    
    $
    8,417
    
    
    $
    8,126
    
    
    $
    8,631
    
    
    
    
    
    
    
    (349
    )
    
    
    
    
    
    
    $
    10,231
    
    
    $
    6,138
    
    
    $
    8,792
    
    
    $
    8,275
    
    
    $
    8,417
    
    
    $
    8,126
    
    
    $
    8,631$
    10,231
    
    
    $
    6,138
    
    
    $
    8,792
    
    
    $
    8,275
    
    
    $
    8,417
    
    
    $
    8,126
    
    
    $
    8,631$
    0.71
    
    
    $
    0.68
    
    
    $
    0.65
    
    
    $
    0.61
    
    
    $
    0.56
    
    
    $
    0.52
    
    
    $
    0.49$
    1.37
    
    
    $
    0.83
    
    
    $
    1.19
    
    
    $
    1.18
    
    
    $
    1.15
    
    
    $
    1.12
    
    
    $
    1.19$
    1.37
    
    
    $
    0.83
    
    
    $
    1.19
    
    
    $
    1.13
    
    
    $
    1.15
    
    
    $
    1.12
    
    
    $
    1.19$
    1.35
    
    
    $
    0.82
    
    
    $
    1.19
    
    
    $
    1.17
    
    
    $
    1.14
    
    
    $
    1.11
    
    
    $
    1.19$
    1.35
    
    
    $
    0.82
    
    
    $
    1.19
    
    
    $
    1.12
    
    
    $
    1.14
    
    
    $
    1.11
    
    
    $
    1.197,451
    
    
    
    7,389
    
    
    
    7,356
    
    
    
    7,326
    
    
    
    7,298
    
    
    
    7,266
    
    
    
    7,2397,569
    
    
    
    7,481
    
    
    
    7,416
    
    
    
    7,400
    
    
    
    7,389
    
    
    
    7,322
    
    
    
    7,257$
    232,213
    
    
    $
    232,014
    
    
    $
    175,902
    
    
    $
    181,518
    
    
    $
    173,862
    
    
    $
    168,667
    
    
    $
    157,038$
    98,645
    
    
    $
    90,592
    
    
    $
    55,222
    
    
    $
    58,017
    
    
    $
    58,979
    
    
    $
    63,580
    
    
    $
    54,509$
    47,839
    
    
    $
    65,394
    
    
    $
    41,750
    
    
    $
    39,575
    
    
    $
    44,725
    
    
    $
    44,330
    
    
    $
    43,92911,105
    
    
    
    15,499
    
    
    
    9,433
    
    
    
    8,613
    
    
    
    9,208
    
    
    
    8,948
    
    
    
    8,3486,436
    
    
    
    10,060
    
    
    
    6,316
    
    
    
    5,242
    
    
    
    6,784
    
    
    
    7,638
    
    
    
    7,91410,834
    
    
    
    9,594
    
    
    
    9,336
    
    
    
    8,215
    
    
    
    8,210
    
    
    
    6,886
    
    
    
    6,5714,383
    
    
    
    2,134
    
    
    
    2,153
    
    
    
    1,689
    
    
    
    1,204
    
    
    
    1,176
    
    
    
    926963
    
    
    
    743
    
    
    
    726
    
    
    
    555
    
    
    
    609
    
    
    
    644
    
    
    
    646$
    81,560
    
    
    $
    103,424
    
    
    $
    69,714
    
    
    $
    63,889
    
    
    $
    70,740
    
    
    $
    69,622
    
    
    $
    68,33442,651
    
    
    
    51,415
    
    
    
    43,014
    
    
    
    39,866
    
    
    
    51,493
    
    
    
    48,099
    
    
    
    59,40312,717
    
    
    
    14,318
    
    
    
    12,590
    
    
    
    11,781
    
    
    
    13,231
    
    
    
    12,338
    
    
    
    14,14810,679
    
    
    
    12,570
    
    
    
    12,860
    
    
    
    11,683
    
    
    
    15,169
    
    
    
    16,975
    
    
    
    23,252947,515
    
    
    
    790,741
    
    
    
    611,541
    
    
    
    357,183
    
    
    
    335,905
    
    
    
    284,248
    
    
    
    279,7981,013,562
    
    
    
    869,044
    
    
    
    680,005
    
    
    
    420,513
    
    
    
    415,798
    
    
    
    361,660
    
    
    
    376,60193,563
    
    
    
    94,948
    
    
    
    95,131
    
    
    
    95,022
    
    
    
    95,443
    
    
    
    95,446
    
    
    
    95,3385,153
    
    
    
    5,197
    
    
    
    5,256
    
    
    
    5,282
    
    
    
    5,305
    
    
    
    5,267
    
    
    
    5,25780
    
    
    
    89
    
    
    
    95
    
    
    
    92
    
    
    
    97
    
    
    
    101
    
    
    
    10537
    
    
    
    43
    
    
    
    37
    
    
    
    37
    
    
    
    30
    
    
    
    30
    
    
    
    3098,833
    
    
    
    100,277
    
    
    
    100,519
    
    
    
    100,433
    
    
    
    100,875
    
    
    
    100,844
    
    
    
    100,7301,577
    
    
    
    1,978
    
    
    
    1,379
    
    
    
    1,196
    
    
    
    1,889
    
    
    
    1,487
    
    
    
    2,030295
    
    
    
    300
    
    
    
    291
    
    
    
    280
    
    
    
    281
    
    
    
    276
    
    
    
    276
 15




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Item 7 Managements Discussion and Analysis of Results of Financial Condition
and Results of Operation
 The Company
  Summary
 Consolidated Net Income
  2005 vs 2004
   2004 vs 2003
 16




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Results Of Operations
 Natural Gas Distribution
   17




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18




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19




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20
    Table of Contents        Natural Gas Storage
   21




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22




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Other
   Income Taxes
  Effects of Inflation
  Gas Supply
  23




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Environmental
  Liquidity and Capital Resources
   24




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##### Table of Contents



FiscalType of Contractual
    
    Fiscal
    
    Fiscal
    
    Fiscal
    
    Fiscal
    
    Fiscal
    
    2011 andObligations (in thousands):
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    thereafterLong-Term Debt
    
    $
    5,213
    
    
    $
    5,019
    
    
    $
    5,300
    
    
    $
    5,454
    
    
    $
    5,653
    
    
    $
    56,153Interest Payments
    
    
    6,656
    
    
    
    6,242
    
    
    
    5,822
    
    
    
    5,382
    
    
    
    4,930
    
    
    
    21,410Estimated Future Minimum Payments for
Bay Gas Service Fees
    
    
    153
    
    
    
    153
    
    
    
    267
    
    
    
    305
    
    
    
    305
    
    
    
    8,429Constuction Contracts for Bay Gas
3rd Cavern Development
    
    
    1,503Gas Supply Contracts
    
    
    14,012
    
    
    
    1,187
    
    
    
    1,187
    
    
    
    1,187
    
    
    
    1,187
    
    
    
    842Total
    
    $
    27,537
    
    
    $
    12,601
    
    
    $
    12,576
    
    
    $
    12,328
    
    
    $
    12,075
    
    
    $
    86,834
 25




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Off-Balance Sheet Arrangements
  Critical Accounting Policies
 Regulatory Accounting.
  Revenue Recognition.
 Reserves.
 26




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Employee Benefits.
  Forward-Looking Statements
  27




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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Normal purchases and Normal
sales,
    28




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Item 8 Financial Statements and Supplementary Data
  
 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A Controls and Procedures
 Conclusion Regarding Disclosure Controls and Procedures
  Managements Report On Internal Control Over Financial Reporting
  i.
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of EnergySouth, Inc.;ii.
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America, and that receipts and expenditures of
EnergySouth, Inc. are being made only in accordance with the authorization of management
and directors of EnergySouth, Inc.; andiii.
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of assets that could have a material effect on the
consolidated financial statements.
  29




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##### Table of Contents



Internal
Control  Integrated Framework
  Changes in Internal Control Over Financial Reporting
  Report of Independent Registered Public Accounting Firm
 
 Managements Report on
Internal Control Over Financial Reporting Internal ControlIntegrated Framework
  30




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##### Table of Contents



Internal ControlIntegrated Framework Internal ControlIntegrated Framework
  /s/ Deloitte & Touche LLP
 31




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##### Table of Contents



PART III
 
 Item 10 Directors, Executive Officers, and Control Persons of the Registrant
    Code of Ethics
  Audit Committee Financial Expert
  
 Item 11 Executive Compensation
  
 Item 12 Security Ownership of Certain Beneficial Owners and Management
  
 Item 13 Certain Relationships and Related Transactions
 32




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##### Table of Contents



Item 14 Principal Accountant Fees and Services
  
 PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
 (a),     (c)
    
    Financial Statements and Financial Statement SchedulesSee EnergySouth, Inc. and Subsidiaries Index to Financial
Statements and Schedules at page F-1, which follows
Part IV hereof.(3)
    
    Exhibits  See Exhibit Index on pages E-1 through E-6.(b)
    
    Exhibits filed with this report are attached hereto.
 33




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##### Table of Contents



Signatures
  ENERGYSOUTH, INC.RegistrantDecember 2, 2005
    
    By:
    
    /s/ Charles P. HuffmanCharles P. Huffman, Senior Vice
President and Chief Financial Officer
  Signature
    
    Title
    
    Date/s/ John C. Hope, III
    
    Director, Chairman
    
    December 2, 2005John C. Hope, III/s/ Walter L. Hovell
    
    Director, Vice-Chairman
    
    December 2, 2005Walter L. HovellDirector, President and
Chief Executive Officer/s/ John S. Davis
    
    (Principal Executive Officer)
    
    December 2, 2005John S. DavisSenior Vice President and
Chief Financial Officer/s/ Charles P. Huffman
    
    (Principal Financial and Accounting Officer)
    
    December 2, 2005Charles P. Huffman
 34




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##### Table of Contents



Signatures (Continued)
 /s/ Walter A. Bell
    
    Director
    
    December 2, 2005Walter A. Bell/s/ Gaylord C. Lyon
    
    Director
    
    December 2, 2005Gaylord C. Lyon/s/ Judy A. Marston
    
    Director
    
    December 2, 2005Judy A. Marston/s/ G. Montgomery Mitchell
    
    Director
    
    December 2, 2005G. Montgomery Mitchell/s/ Harris V. Morrissette
    
    Director
    
    December 2, 2005Harris V. Morrissette/s/ S. Felton Mitchell
    
    Director
    
    December 2, 2005S. Felton Mitchell/s/ Robert H. Rouse
    
    Director
    
    December 2, 2005Robert H. Rouse/s/ Thomas B. Van Antwerp
    
    Director
    
    December 2, 2005Thomas B. Van Antwerp
 35




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Statements of Income for the years ended
September 30, 2005, 2004 and 2003
    
    
    F-3Consolidated Balance Sheets, September 30, 2005 and 2004
    
    
    F-4Consolidated Statements of Common Stockholders Equity
for the years ended September 30, 2005, 2004 and 2003
    
    
    F-6Consolidated Statements of Cash Flows for the years ended
September 30, 2005, 2004 and 2003
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8Financial Statement SchedulesSchedule II            Valuation and Qualifying Accounts and Reserves, Years
Ended September 30, 2005, 2004 and 2003
    
    
    S-1
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal ControlIntegrated
Framework
 /s/ Deloitte & Touche LLP
 F-2




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##### Table of Contents



ONSOLIDATED STATEMENTS OF INCOME
 EnergySouth, Inc.
 Years Ended September 30, (in thousands, except per share data)
    
    2005
    
    2004
    
    2003Operating RevenuesGas Revenues
    
    $
    119,987
    
    
    $
    111,488
    
    
    $
    95,150Merchandise Sales
    
    
    3,263
    
    
    
    3,029
    
    
    
    3,259Other
    
    
    1,356
    
    
    
    1,455
    
    
    
    1,206Total Operating Revenues
    
    
    124,606
    
    
    
    115,972
    
    
    
    99,615Operating ExpensesCost of Gas
    
    
    47,166
    
    
    
    41,404
    
    
    
    30,859Cost of Merchandise
    
    
    2,765
    
    
    
    2,582
    
    
    
    2,473Operations and Maintenance
    
    
    25,314
    
    
    
    25,219
    
    
    
    24,425Depreciation
    
    
    10,122
    
    
    
    9,712
    
    
    
    8,923Taxes, Other Than Income Taxes
    
    
    8,655
    
    
    
    8,258
    
    
    
    7,277Total Operating Expenses
    
    
    94,022
    
    
    
    87,175
    
    
    
    73,957Operating Income
    
    
    30,584
    
    
    
    28,797
    
    
    
    25,658Other Income and (Expense)Interest Expense
    
    
    (7,283
    )
    
    
    (7,897
    )
    
    
    (8,369
    )Allowance for Borrowed Funds Used During Construction
    
    
    210
    
    
    
    20
    
    
    
    1,231Interest Income
    
    
    259
    
    
    
    60
    
    
    
    71Minority Interest
    
    
    (938
    )
    
    
    (805
    )
    
    
    (754
    )Total Other Income (Expense)
    
    
    (7,752
    )
    
    
    (8,622
    )
    
    
    (7,821
    )Income Before Income Taxes
    
    
    22,832
    
    
    
    20,175
    
    
    
    17,837Income Taxes
    
    
    8,991
    
    
    
    7,607
    
    
    
    6,702Net Income
    
    $
    13,841
    
    
    $
    12,568
    
    
    $
    11,135Earnings Per ShareBasic
    
    $
    1.76
    
    
    $
    1.62
    
    
    $
    1.47Diluted
    
    $
    1.74
    
    
    $
    1.60
    
    
    $
    1.45Average Common Shares OutstandingBasic
    
    
    7,854
    
    
    
    7,764
    
    
    
    7,599Diluted
    
    
    7,950
    
    
    
    7,860
    
    
    
    7,686
  F-3




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##### Table of Contents



CONSOLIDATED BALANCE SHEETS
 EnergySouth, Inc.
 September 30, (in thousands):
    
    2005
    
    2004ASSETSCurrent AssetsCash and Cash Equivalents
    
    $
    9,662
    
    
    $
    9,464ReceivablesGas
    
    
    7,568
    
    
    
    6,244Unbilled Revenue
    
    
    1,777
    
    
    
    1,143Merchandise
    
    
    2,123
    
    
    
    2,249Other
    
    
    1,468
    
    
    
    1,273Allowance for Doubtful Accounts
    
    
    (1,029
    )
    
    
    (856
    )Materials, Supplies, and Merchandise (At Average Cost)
    
    
    1,319
    
    
    
    1,524Gas Stored Underground For Current Use (At Average Cost)
    
    
    5,666
    
    
    
    4,235Regulatory Assets
    
    
    323
    
    
    
    3,606Deferred Income Taxes
    
    
    3,784
    
    
    
    434Prepayments
    
    
    1,814
    
    
    
    1,731Total Current Assets
    
    
    34,475
    
    
    
    31,047Property, Plant, and Equipment
    
    
    283,605
    
    
    
    274,789Less: Accumulated Depreciation and Amortization
    
    
    77,982
    
    
    
    70,417Property, Plant, and Equipment  Net
    
    
    205,623
    
    
    
    204,372Construction Work in Progress
    
    
    6,265
    
    
    
    225Total Property, Plant, and Equipment
    
    
    211,888
    
    
    
    204,597Other AssetsPrepaid Pension Cost
    
    
    939
    
    
    
    1,102Deferred Charges
    
    
    390
    
    
    
    567Prepayments
    
    
    1,249
    
    
    
    957Regulatory Assets
    
    
    333
    
    
    
    660Merchandise Receivables Due After One Year
    
    
    3,185
    
    
    
    3,374Total Other Assets
    
    
    6,096
    
    
    
    6,660Total
    
    $
    252,459
    
    
    $
    242,304
  F-4




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##### Table of Contents



September 30, (in thousands, except share data):
    
    2005
    
    2004LIABILITIES AND CAPITALIZATIONCurrent LiabilitiesCurrent Maturities of Long-Term Debt
    
    $
    5,213
    
    
    $
    6,248Accounts Payable
    
    
    6,235
    
    
    
    5,134Dividends Declared
    
    
    1,684
    
    
    
    1,561Customer Deposits
    
    
    1,294
    
    
    
    1,468Taxes Accrued
    
    
    6,037
    
    
    
    2,250Interest Accrued
    
    
    970
    
    
    
    1,122Regulatory Liabilities
    
    
    6,704
    
    
    
    4,843Other
    
    
    1,150
    
    
    
    998Total Current Liabilities
    
    
    29,287
    
    
    
    23,624Other LiabilitiesAccrued Postretirement Benefit Cost
    
    
    762
    
    
    
    513Deferred Income Taxes
    
    
    22,626
    
    
    
    21,378Deferred Investment Tax Credits
    
    
    236
    
    
    
    262Regulatory Liability
    
    
    12,576
    
    
    
    11,788Other
    
    
    1,597
    
    
    
    1,413Total Other Liabilities
    
    
    37,797
    
    
    
    35,35467,084
    
    
    
    58,978CapitalizationStockholders EquityCommon Stock, $.01 Par Value
(Authorized 20,000,000 Shares; Outstanding
2005 - 7,898,000; 2004 - 7,827,000 Shares)
    
    
    79
    
    
    
    78Capital in Excess of Par Value
    
    
    27,457
    
    
    
    26,162Retained Earnings
    
    
    74,952
    
    
    
    67,625Grantor Trust, at cost
    
    
    (1,539
    )
    
    
    (1,355
    )Deferred Compensation Liability
    
    
    1,539
    
    
    
    1,355Total Stockholders Equity
    
    
    102,488
    
    
    
    93,865Minority Interest
    
    
    5,308
    
    
    
    4,769Long-Term Debt
    
    
    77,579
    
    
    
    84,692Total Capitalization
    
    
    185,375
    
    
    
    183,326Total
    
    $
    252,459
    
    
    $
    242,304
  F-5




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##### Table of Contents



CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS EQUITY
 EnergySouth, Inc.
 Common Stock
    
    
    Capital inNumber of
    
    
    Par
    
    
    Excess of
    
    
    Retained
    
    
    Grantor
    
    
    Deferred(In thousands, except per share data)
    
    Shares
    
    
    Value
    
    
    Par Value
    
    
    Earnings
    
    
    Trust
    
    
    Compensation
    
    
    TotalBalance at September 30, 2002
    
    
    7,571
    
    
    $
    76
    
    
    $
    21,581
    
    
    $
    55,626
    
    
    
    
    
    
    
    
    
    
    $
    77,283Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,135
    
    
    
    
    
    
    
    
    
    
    
    11,135Dividend Reinvestment Plan
    
    
    20
    
    
    
    
    
    
    
    351
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    351Stock Options Exercised Including Income
Tax Benefits
    
    
    108
    
    
    
    1
    
    
    
    1,531
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,532Cash Dividends  $0.74 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,647
    )
    
    
    
    
    
    
    
    
    
    
    (5,647
    )Balance at September 30, 2003
    
    
    7,699
    
    
    
    77
    
    
    
    23,463
    
    
    
    61,114
    
    
    
    
    
    
    
    
    
    
    
    84,654Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,568
    
    
    
    
    
    
    
    
    
    
    
    12,568Dividend Reinvestment Plan
    
    
    16
    
    
    
    
    
    
    
    370
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370Stock Options Exercised Including Income
Tax Benefits
    
    
    54
    
    
    
    1
    
    
    
    940
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    941Shares issued to Grantor Trust to fund
Deferred Compensaton Liability
    
    
    58
    
    
    
    
    
    
    
    1,389
    
    
    
    
    
    
    
    (1,389
    )
    
    
    1,389
    
    
    
    1,389Distributions from Grantor Trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    (34
    )Cash Dividends  $0.78 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,057
    )
    
    
    
    
    
    
    
    
    
    
    (6,057
    )Balance at September 30, 2004
    
    
    7,827
    
    
    
    78
    
    
    
    26,162
    
    
    
    67,625
    
    
    
    (1,355
    )
    
    
    1,355
    
    
    
    93,865Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,841
    
    
    
    
    
    
    
    
    
    
    
    13,841Dividend Reinvestment Plan
    
    
    14
    
    
    
    
    
    
    
    396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    396Stock Options Exercised Including Income
Tax Benefits
    
    
    49
    
    
    
    1
    
    
    
    680
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    681Shares issued to Grantor Trust to fund
Deferred Compensation Liability
    
    
    8
    
    
    
    
    
    
    
    219
    
    
    
    
    
    
    
    (219
    )
    
    
    219
    
    
    
    219Distributions from Grantor Trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    (35
    )Cash Dividends  $0.83 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,514
    )
    
    
    
    
    
    
    
    
    
    
    (6,514
    )Balance at September 30, 2005
    
    
    7,898
    
    
    $
    79
    
    
    $
    27,457
    
    
    $
    74,952
    
    
    $
    (1,539
    )
    
    $
    1,539
    
    
    $
    102,488
  F-6




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS
 EnergySouth, Inc.
 Years Ended September 30, (in thousands)
    
    2005
    
    2004
    
    2003Cash Flows from Operating ActivitiesNet Income
    
    $
    13,841
    
    
    $
    12,568
    
    
    $
    11,135Depreciation and Amortization
    
    
    10,454
    
    
    
    10,079
    
    
    
    9,301Provision for Losses on Receivables
    
    
    869
    
    
    
    1,129
    
    
    
    576Provision for Losses on Inventory
    
    
    20
    
    
    
    72
    
    
    
    46Provision for Deferred Income Taxes
    
    
    (2,104
    )
    
    
    2,931
    
    
    
    5,475Minority Interest
    
    
    938
    
    
    
    805
    
    
    
    754Changes in Operating Assets and Liabilities:Receivables
    
    
    (2,273
    )
    
    
    (754
    )
    
    
    (2,138
    )Inventory
    
    
    (1,203
    )
    
    
    (651
    )
    
    
    (521
    )Payables
    
    
    270
    
    
    
    (1,478
    )
    
    
    1,111Taxes Payable
    
    
    3,724
    
    
    
    1,061
    
    
    
    (885
    )Deferred Purchased Gas Adjustment
    
    
    4,648
    
    
    
    (736
    )
    
    
    (5,715
    )Other
    
    
    1,395
    
    
    
    1,826
    
    
    
    (1,492
    )Net Cash Provided by Operating Activities
    
    
    30,579
    
    
    
    26,852
    
    
    
    17,647Cash Flows from Investing ActivitiesCapital Expenditures
    
    
    (16,428
    )
    
    
    (8,491
    )
    
    
    (16,206
    )Net Cash Used In Investing Activities
    
    
    (16,428
    )
    
    
    (8,491
    )
    
    
    (16,206
    )Cash Flows from Financing ActivitiesRepayment of Long-Term Debt
    
    
    (8,148
    )
    
    
    (7,706
    )
    
    
    (3,909
    )Changes in Short-term Borrowings
    
    
    
    
    
    
    (250
    )
    
    
    250Payment of Dividends
    
    
    (6,381
    )
    
    
    (5,964
    )
    
    
    (5,550
    )Dividend Reinvestment
    
    
    396
    
    
    
    370
    
    
    
    351Exercise of Stock Options
    
    
    581
    
    
    
    748
    
    
    
    1,193Partnership Distributions
    
    
    (401
    )
    
    
    (177
    )
    
    
    (256
    )Net Cash Used In Financing Activities
    
    
    (13,953
    )
    
    
    (12,979
    )
    
    
    (7,921
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    198
    
    
    
    5,382
    
    
    
    (6,480
    )Cash and
Cash Equivalents at Beginning of Year
    
    
    9,464
    
    
    
    4,082
    
    
    
    10,562Cash and Cash Equivalents at End of Year
    
    $
    9,662
    
    
    $
    9,464
    
    
    $
    4,082Cash Paid During the Year for:Interest
    
    $
    7,351
    
    
    $
    7,932
    
    
    $
    8,312Income Taxes
    
    $
    7,300
    
    
    $
    3,549
    
    
    $
    1,883Noncash Transactions from Investing and Financing Activities:Accruals for Capital Expenditures
    
    $
    1,198
    
    
    $
    748
    
    
    $
    669Dividend Payments Held in Escrow
    
    $
    1,610
    
    
    $
    1,477
    
    
    $
    1,384
  F-7




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
  Revenues and Gas Costs
    Property, Plant, and Equipment
   F-8




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##### Table of Contents



Cash Equivalents
  Income Taxes
  Earnings Per Share
  F-9




---



##### Table of Contents



EnergySouth, Inc.In Thousands
    
    2005
    
    2004
    
    2003Weighted Average Common Shares
    
    
    7,854
    
    
    
    7,764
    
    
    
    7,599Effect of Dilutive Securities:Options to Purchase Common Stock
    
    
    96
    
    
    
    96
    
    
    
    87Diluted Average Common Shares
    
    
    7,950
    
    
    
    7,860
    
    
    
    7,686
   Use of Estimates
  Long-lived Assets
  F-10




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##### Table of Contents



Regulatory Assets and Liabilities
   2005
    
    2004Current
    
    Noncurrent
    
    Current
    
    NoncurrentAssetsDeferred Purchased Gas Adjustment
    
    
    
    
    
    
    
    
    
    $
    3,269ESR Fund
    
    $
    167
    
    
    $
    333
    
    
    
    167
    
    
    $
    500Bad Debt Reserve
    
    
    133
    
    
    
    
    
    
    
    133
    
    
    
    133Other
    
    
    23
    
    
    
    
    
    
    
    37
    
    
    
    27Regulatory Assets
    
    $
    323
    
    
    $
    333
    
    
    $
    3,606
    
    
    $
    660LiabilitiesBad Debt Reserve
    
    
    
    
    
    
    
    
    
    $
    20ESR Fund
    
    $
    975
    
    
    
    
    
    
    
    854Deferred Investment Tax Credit
    
    
    15
    
    
    $
    121
    
    
    
    15
    
    
    $
    136RSE Adjustment
    
    
    433
    
    
    
    
    
    
    
    343Gross Receipt Tax Collections
    
    
    3,751
    
    
    
    
    
    
    
    3,467Deferred Purchased Gas Adjustment
    
    
    1,379Asset Retirement Obligations
    
    
    
    
    
    
    12,455
    
    
    
    
    
    
    
    11,652Other
    
    
    151
    
    
    
    
    
    
    
    144Regulatory Liabilities
    
    $
    6,704
    
    
    $
    12,576
    
    
    $
    4,843
    
    
    $
    11,788
  Stock-Based Compensation
  F-11




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##### Table of Contents



(In thousands, except per share data)
    
    2005
    
    2004
    
    2003Net Income, as reported
    
    $
    13,841
    
    
    $
    12,568
    
    
    $
    11,135Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related
tax effects
    
    
    202
    
    
    
    185
    
    
    
    164Pro forma net income
    
    $
    13,639
    
    
    $
    12,383
    
    
    $
    10,971Earnings per shareBasic  as reported
    
    $
    1.76
    
    
    $
    1.62
    
    
    $
    1.47Basic  pro forma
    
    $
    1.74
    
    
    $
    1.59
    
    
    $
    1.44Diluted  as reported
    
    $
    1.74
    
    
    $
    1.60
    
    
    $
    1.45Diluted  pro forma
    
    $
    1.72
    
    
    $
    1.58
    
    
    $
    1.43Average Common Shares OutstandingShares  Basic
    
    
    7,854
    
    
    
    7,764
    
    
    
    7,599Shares  Diluted
    
    
    7,912
    
    
    
    7,820
    
    
    
    7,655
  New Accounting Standards
   F-12




---



##### Table of Contents



Reclassifications
  2. RATES AND REGULATIONS
  F-13




---



##### Table of Contents



force majeure
 F-14




---



##### Table of Contents



F-15




---



##### Table of Contents



3. PROPERTY, PLANT, AND EQUIPMENT
  2005
    
    2004Distribution Plant
    
    $
    153,435
    
    
    $
    146,869General Plant
    
    
    23,855
    
    
    
    23,289Storage Plant
    
    
    73,218
    
    
    
    72,791Transmission Plant
    
    
    23,829
    
    
    
    22,507Acquisition Adjustment
    
    
    9,268
    
    
    
    9,333Total Property, Plant, and Equipment
    
    $
    283,605
    
    
    $
    274,789
 4. NOTES PAYABLE AND LONG-TERM DEBT
  2005
    
    2004Mobile Gas Service CorporationFirst Mortgage Bonds8.75% Series, due July 1, 2022
    
    $
    10,740
    
    
    $
    11,3707.48% Series, due July 1, 2023
    
    
    10,200
    
    
    
    11,4007.27% Series, due November 1, 2006
    
    
    450
    
    
    
    3,4506.90% Series, due August 20, 2017
    
    
    10,430
    
    
    
    10,9779% Note, due May 13, 2013
    
    
    2,475
    
    
    
    2,680Bay Gas Storage Company, Ltd.8.45% Guaranteed Senior Secured Notes,
due December 1, 2017
    
    
    48,497
    
    
    
    51,063Total
    
    
    82,792
    
    
    
    90,940Less Amounts Due Within One Year
    
    
    5,213
    
    
    
    6,248Long-Term Debt
    
    $
    77,579
    
    
    $
    84,692
   F-16




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##### Table of Contents



5. INCOME TAXES
  2005
    
    2004
    
    2003CurrentFederal
    
    $
    9,983
    
    
    $
    4,294
    
    
    $
    1,134State
    
    
    1,162
    
    
    
    473
    
    
    
    105Total Current Taxes
    
    
    11,145
    
    
    
    4,767
    
    
    
    1,239DeferredFederal
    
    
    (1,985
    )
    
    
    2,425
    
    
    
    4,805State
    
    
    (143
    )
    
    
    441
    
    
    
    684Total Deferred Taxes
    
    
    (2,128
    )
    
    
    2,866
    
    
    
    5,489Deferred investment tax credit
amortization
    
    
    (26
    )
    
    
    (26
    )
    
    
    (26
    )Total Income Tax Expense
    
    $
    8,991
    
    
    $
    7,607
    
    
    $
    6,702
  2005
    
    2004
    
    2003Income Tax Expense at Federal
Statutory Rate
    
    $
    7,991
    
    
    $
    7,061
    
    
    $
    6,118State Income Taxes
    
    
    729
    
    
    
    644
    
    
    
    476Other  Net
    
    
    271
    
    
    
    (98
    )
    
    
    108Total Income Tax Expense
    
    $
    8,991
    
    
    $
    7,607
    
    
    $
    6,702Effective tax rate
    
    
    39.4
    %
    
    
    37.7
    %
    
    
    37.6
    %
 F-17




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##### Table of Contents



2005
    
    2004Deferred Tax LiabilitiesDifferences Between Book and TaxBasis of Property
    
    $
    24,394
    
    
    $
    22,577Prepaid Insurance
    
    
    243
    
    
    
    234Purchased Gas Adjustment
    
    
    
    
    
    
    1,216Pension
    
    
    353
    
    
    
    410Other
    
    
    73
    
    
    
    80Total Deferred Tax Liabilities
    
    
    25,063
    
    
    
    24,517Deferred Tax AssetsGross Receipts Taxes
    
    
    1,235
    
    
    
    1,133Regulatory Liabilities
    
    
    2,006
    
    
    
    183Purchased Gas Adjustment
    
    
    518Post Retirement Benefits
    
    
    174Post Employment Benefits
    
    
    152
    
    
    
    190Bad Debts
    
    
    528
    
    
    
    457Accrued Vacation
    
    
    234
    
    
    
    230Uniform Capitalization
    
    
    254
    
    
    
    238Deferred Payments
    
    
    917
    
    
    
    814State of Alabama Net Operating Loss
    
    
    
    
    
    
    113Other
    
    
    203
    
    
    
    215Total Deferred Tax Assets
    
    
    6,221
    
    
    
    3,573Net Deferred Tax Liability
    
    $
    18,842
    
    
    $
    20,944
 6. CAPITAL STOCK
  F-18




---



##### Table of Contents



Weighted Average
    
    Weighted AverageShares
    
    Exercise Price
    
    Remaining LifeOutstanding at September 30, 2002
    
    
    273,863
    
    
    $
    12.010
    
    
    5.65 yearsGranted
    
    
    98,250
    
    
    
    17.839Exercised
    
    
    (108,525
    )
    
    
    10.999Forfeited
    
    
    (1,313
    )
    
    
    12.917Outstanding at September 30, 2003
    
    
    262,275
    
    
    
    14.608
    
    
    6.93 yearsGranted
    
    
    76,950
    
    
    
    24.170Exercised
    
    
    (53,613
    )
    
    
    13.946Forfeited
    
    
    (9,712
    )
    
    
    17.315Outstanding at September 30, 2004
    
    
    275,900
    
    
    
    17.308
    
    
    6.95 yearsGranted
    
    
    75,750
    
    
    
    28.365Exercised
    
    
    (49,286
    )
    
    
    11.789Forfeited
    
    
    (2,775
    )
    
    
    20.872Outstanding at September 30, 2005
    
    
    299,589
    
    
    $
    20.979
    
    
    7.44 yearsExercisable at September 30, 2003
    
    
    112,275
    
    
    $
    11.978
    
    
    4.70 yearsExercisable at September 30, 2004
    
    
    117,725
    
    
    $
    12.788
    
    
    4.57 yearsExercisable at September 30, 2005
    
    
    122,627
    
    
    $
    16.161
    
    
    5.88 yearsRemaining reserved for grant
at September 30, 2005
    
    
    307,575
   2005
    
    2004
    
    2003Risk Free Interest Rate
    
    
    3.90
    %
    
    
    4.20
    %
    
    
    3.90
    %Expected Life
    
    6 years
    
    6.16 years
    
    10 yearsStock Price Volatility
    
    
    20.96
    %
    
    
    25.60
    %
    
    
    38.80
    %Dividend Yield
    
    
    3.13
    %
    
    
    3.10
    %
    
    
    4.20
    %
   F-19




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##### Table of Contents



7. RETIREMENT PLANS AND OTHER BENEFITS
    F-20




---



##### Table of Contents



Pension
    
    PostretirementBenefits
    
    Benefits2005
    
    2004
    
    2005
    
    2004Change in Benefit ObligationBenefit Obligation at Beginning of the Period
    
    $
    30,559
    
    
    $
    26,686
    
    
    $
    5,396
    
    
    $
    4,286Service Cost
    
    
    861
    
    
    
    844
    
    
    
    180
    
    
    
    115Interest Cost
    
    
    1,781
    
    
    
    1,583
    
    
    
    322
    
    
    
    268Participant Contributions
    
    
    
    
    
    
    
    
    
    
    53
    
    
    
    34Benefits Paid
    
    
    (1,459
    )
    
    
    (1,529
    )
    
    
    (209
    )
    
    
    (111
    )Actuarial Loss
    
    
    1,262
    
    
    
    2,975
    
    
    
    449
    
    
    
    804Benefit Obligation at the End of the Period
    
    $
    33,004
    
    
    $
    30,559
    
    
    $
    6,191
    
    
    $
    5,396Change in Plan AssetsFair Value of Assets at Beginning of the Period
    
    $
    35,660
    
    
    $
    33,356
    
    
    $
    3,652
    
    
    $
    3,634Benefits Paid
    
    
    (1,459
    )
    
    
    (1,529
    )
    
    
    (209
    )
    
    
    (111
    )Employer Contributions
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2Participant Contributions
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    35Actual Return on Plan Assets
    
    
    4,226
    
    
    
    3,833
    
    
    
    336
    
    
    
    92Fair Value of Plan Assets at the End of the Period
    
    $
    38,427
    
    
    $
    35,660
    
    
    $
    3,834
    
    
    $
    3,652Reconciliation of Funded StatusPlan Assets in Excess of (Less Than) Benefit Obligation
    
    $
    5,423
    
    
    $
    5,102
    
    
    $
    (2,357
    )
    
    $
    (1,745
    )Unrecognized Net (Gain) Loss
    
    
    (5,231
    )
    
    
    (4,840
    )
    
    
    1,901
    
    
    
    1,581Prior Service Cost Not Yet Recognized
    
    
    747
    
    
    
    840
    
    
    
    (306
    )
    
    
    (349
    )Accrued Benefit Asset (Liability)
    
    $
    939
    
    
    $
    1,102
    
    
    $
    (762
    )
    
    $
    (513
    )Accumulated Benefit Obligation
    
    $
    29,593
    
    
    $
    27,206
  Pension BenefitsComponents of Net Periodic Benefit Cost
    
    2005
    
    2004
    
    2003Service Cost
    
    $
    861
    
    
    $
    844
    
    
    $
    691Interest Cost
    
    
    1,780
    
    
    
    1,583
    
    
    
    1,526Amortization of Transition Asset
    
    
    
    
    
    
    (128
    )
    
    
    (183
    )Amortization of Prior Service Cost
    
    
    94
    
    
    
    94
    
    
    
    94Amortization of Unrecognized Gain
    
    
    
    
    
    
    (87
    )
    
    
    (355
    )Expected return on Plan Assets
    
    
    (2,572
    )
    
    
    (2,551
    )
    
    
    (2,312
    )Net Periodic Benefit Cost (Income)
    
    $
    163
    
    
    $
    (245
    )
    
    $
    (539
    )
 Postretirement BenefitsComponents of Net Periodic Benefit Cost
    
    2005
    
    2004
    
    2003Service Cost
    
    $
    180
    
    
    $
    115
    
    
    $
    100Interest Cost
    
    
    322
    
    
    
    268
    
    
    
    255Amortization of Prior Service Cost
    
    
    (44
    )
    
    
    (44
    )
    
    
    (44
    )Amortization of Unrecognized Loss
    
    
    65
    
    
    
    30
    
    
    
    6Expected return on Plan Assets
    
    
    (272
    )
    
    
    (271
    )
    
    
    (211
    )Net Periodic Benefit Cost
    
    $
    251
    
    
    $
    98
    
    
    $
    106
  F-21




---



##### Table of Contents



Pension
    
    PostretirementBenefits
    
    Benefits2005
    
    2004
    
    2005
    
    2004Weighted-Average Assumptions to Determine Benefits ObligationsDiscount Rate
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    5.50
    %
    
    
    6.00
    %Rate of Compensation Increase
    
    
    3.75
    %
    
    
    3.75
    %Measurement Date
    
    
    9/30/2005
    
    
    
    9/30/2004
    
    
    
    9/30/2005
    
    
    
    9/30/2004Weighted-Average Assumptions to Determine Net Periodic Benefit CostDiscount Rate
    
    
    6.00
    %
    
    
    6.00
    %
    
    
    6.00
    %
    
    
    6.00
    %Expected Long-Term Rate of Return on Plan Assets
    
    
    8.25
    %
    
    
    8.25
    %
    
    
    7.75
    %
    
    
    7.75
    %Rate of Compensation Increase
    
    
    3.75
    %
    
    
    3.75
    %Assumed Health Care Cost Trend Rates at September 30Health Care Cost Trend Rate Assumed for Next Year
    
    
    
    
    
    
    
    
    
    
    10.00
    %
    
    
    10.00
    %Rate to Which the Cost Trend Rate is Assumed to Decline
(the ultimate trend rate)
    
    
    
    
    
    
    
    
    
    
    5.00
    %
    
    
    5.00
    %Year that the Rate Reaches the Ultimate Trend Rate
    
    
    
    
    
    
    
    
    
    
    2010
    
    
    
    2009
  Postretirement BenefitsOne Percentage-Point Increase
    
    2005
    
    2004Effect on Total of Service and Interest Components
    
    $
    55
    
    
    $
    40Effect on Postretirement Benefit Obligations
    
    
    415
    
    
    
    322
 Postretirement BenefitsOne Percentage-Point Decrease
    
    2005
    
    2004Effect on Total of Service and Interest Components
    
    $
    (45
    )
    
    $
    (33
    )Effect on Postretirement Benefit Obligations
    
    
    (351
    )
    
    
    (273
    )
  F-22




---



##### Table of Contents



Pension BenefitsCurrent
    
    Percentage ofTarget
    
    Plan AssetsAllocation
    
    September 30,Asset Category
    
    Range
    
    2005
    
    2004Equity
    
    
    60%-65
    %
    
    
    65
    %
    
    
    64
    %Fixed income
    
    
    35%-40
    %
    
    
    34
    %
    
    
    35
    %Cash and Cash Equivalents
    
    0% to 2%
    
    
    1
    %
    
    
    1
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Postretirement BenefitsCurrent
    
    Percentage ofTarget
    
    Plan AssetsAllocation
    
    September 30,Asset Category
    
    Range
    
    2005
    
    2004Equity
    
    
    57%-67
    %
    
    
    66
    %
    
    
    63
    %Fixed income
    
    
    33%-43
    %
    
    
    31
    %
    
    
    34
    %Cash and Cash Equivalents
    
    as needed
    
    
    3
    %
    
    
    3
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    F-23




---



##### Table of Contents



Post-Pension
    
    RetirementExpected Benefit Payments
    
    Benefits
    
    Benefits
    
    TotalFiscal Year Ending9/30/2006
    
    $
    1,481
    
    
    $
    330
    
    
    $
    1,8119/30/2007
    
    
    1,518
    
    
    
    345
    
    
    
    1,8639/30/2008
    
    
    1,595
    
    
    
    382
    
    
    
    1,9779/30/2009
    
    
    1,655
    
    
    
    397
    
    
    
    2,0529/30/2010
    
    
    1,713
    
    
    
    399
    
    
    
    2,112Next Five Years
    
    
    9,822
    
    
    
    2,131
    
    
    
    11,953
    8. COMMITMENTS AND CONTINGENCIES
 Normal purchases and Normal sales,
 F-24




---



##### Table of Contents



Mobile Gas
    
    
    Bay GasGas
    
    
    MinimumFiscal
    
    Supply
    
    
    Payments for
    
    
    Construction
    
    
    TotalYear
    
    Contracts
    
    
    Service Fees
    
    
    Contracts
    
    
    Commitments2006
    
    $
    14,012
    
    
    $
    153
    
    
    $
    1,503
    
    
    $
    15,6682007
    
    
    1,187
    
    
    
    153
    
    
    
    
    
    
    
    1,3402008
    
    
    1,187
    
    
    
    267
    
    
    
    
    
    
    
    1,4542009
    
    
    1,187
    
    
    
    305
    
    
    
    
    
    
    
    1,4922010
    
    
    1,187
    
    
    
    305
    
    
    
    
    
    
    
    1,4922011 - and
thereafter
    
    
    842
    
    
    
    8,429
    
    
    
    
    
    
    
    9,271Total
    
    $
    19,602
    
    
    $
    9,612
    
    
    $
    1,503
    
    
    $
    30,717
  F-25




---



##### Table of Contents



9. FAIR VALUE OF FINANCIAL INSTRUMENTS
   F-26




---



##### Table of Contents



2005
    
    
    2004Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueLong-term debt
    
    $
    82,792
    
    
    $
    97,127
    
    
    $
    90,940
    
    
    $
    107,519
 10. FINANCIAL INFORMATION BY BUSINESS SEGMENT
    F-27




---



##### Table of Contents



As of and for the year ended
    
    Natural Gas
    
    
    Natural GasSeptember 30, 2005 (in thousands):
    
    Distribution
    
    
    Storage
    
    
    Other
    
    
    Eliminations
    
    
    ConsolidatedOperating Revenues
    
    $
    104,831
    
    
    $
    19,357
    
    
    $
    4,619
    
    
    $
    (4,201
    )
    
    $
    124,606Cost of Gas
    
    
    51,367
    
    
    
    
    
    
    
    
    
    
    
    (4,201
    )
    
    
    47,166Cost of Merchandise & Jobbing
    
    
    
    
    
    
    
    
    
    
    2,765
    
    
    
    
    
    
    
    2,765Operations and Maintenance Expense
    
    
    20,614
    
    
    
    3,280
    
    
    
    1,420
    
    
    
    
    
    
    
    25,314Depreciation Expense
    
    
    7,651
    
    
    
    2,471
    
    
    
    
    
    
    
    
    
    
    
    10,122Taxes, Other Than Income Taxes
    
    
    7,703
    
    
    
    883
    
    
    
    69
    
    
    
    
    
    
    
    8,655Operating Income
    
    
    17,496
    
    
    
    12,723
    
    
    
    365
    
    
    
    
    
    
    
    30,584Interest Income (Expense)  Net
    
    
    (2,897
    )
    
    
    (4,099
    )
    
    
    (28
    )
    
    
    
    
    
    
    (7,024
    )Allow. for Borrowed Funds Used
During Construction
    
    
    36
    
    
    
    174
    
    
    
    
    
    
    
    
    
    
    
    210Less: Minority Interest
    
    
    (131
    )
    
    
    (807
    )
    
    
    
    
    
    
    
    
    
    
    (938
    )Income Before Income Taxes
    
    $
    14,504
    
    
    $
    7,991
    
    
    $
    337
    
    
    
    
    
    
    $
    22,832Capital Expenditures
    
    $
    9,571
    
    
    $
    7,307
    
    
    
    
    
    
    
    
    
    
    $
    16,878Property, Plant, and Equipment, Net
    
    $
    127,046
    
    
    $
    84,842
    
    
    
    
    
    
    
    
    
    
    $
    211,888Total Assets
    
    $
    149,417
    
    
    $
    95,529
    
    
    $
    7,513
    
    
    
    
    
    
    $
    252,459
 As of and for the year ended
    
    Natural Gas
    
    
    Natural GasSeptember 30, 2004 (in thousands):
    
    Distribution
    
    
    Storage
    
    
    Other
    
    
    Eliminations
    
    
    ConsolidatedOperating Revenues
    
    $
    97,910
    
    
    $
    17,767
    
    
    $
    4,484
    
    
    $
    (4,189
    )
    
    $
    115,972Cost of Gas
    
    
    45,593
    
    
    
    
    
    
    
    
    
    
    
    (4,189
    )
    
    
    41,404Cost of Merchandise & Jobbing
    
    
    
    
    
    
    
    
    
    
    2,582
    
    
    
    
    
    
    
    2,582Operations and Maintenance Expense
    
    
    20,694
    
    
    
    2,983
    
    
    
    1,542
    
    
    
    
    
    
    
    25,219Depreciation Expense
    
    
    7,309
    
    
    
    2,403
    
    
    
    
    
    
    
    
    
    
    
    9,712Taxes, Other Than Income Taxes
    
    
    7,337
    
    
    
    859
    
    
    
    62
    
    
    
    
    
    
    
    8,258Operating Income
    
    
    16,977
    
    
    
    11,522
    
    
    
    298
    
    
    
    
    
    
    
    28,797Interest Income (Expense)  Net
    
    
    (3,261
    )
    
    
    (4,434
    )
    
    
    (142
    )
    
    
    
    
    
    
    (7,837
    )Allow. for Borrowed Funds Used
During Construction
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Less: Minority Interest
    
    
    (152
    )
    
    
    (653
    )
    
    
    
    
    
    
    
    
    
    
    (805
    )Income Before Income Taxes
    
    $
    13,584
    
    
    $
    6,435
    
    
    $
    156
    
    
    
    
    
    
    $
    20,175Capital Expenditures
    
    $
    7,663
    
    
    $
    907
    
    
    
    
    
    
    
    
    
    
    $
    8,570Property, Plant, and Equipment, Net
    
    $
    124,618
    
    
    $
    79,979
    
    
    
    
    
    
    
    
    
    
    $
    204,597Total Assets
    
    $
    141,331
    
    
    $
    91,599
    
    
    $
    9,374
    
    
    
    
    
    
    $
    242,304
 F-28




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##### Table of Contents



As of and for the year ended
    
    Natural Gas
    
    
    Natural GasSeptember 30, 2003 (in thousands):
    
    Distribution
    
    
    Storage
    
    
    Other
    
    
    Eliminations
    
    
    ConsolidatedOperating Revenues
    
    $
    84,790
    
    
    $
    14,590
    
    
    $
    4,463
    
    
    $
    (4,228
    )
    
    $
    99,615Cost of Gas
    
    
    35,061
    
    
    
    
    
    
    
    
    
    
    
    (4,202
    )
    
    
    30,859Cost of Merchandise & Jobbing
    
    
    
    
    
    
    
    
    
    
    2,473
    
    
    
    
    
    
    
    2,473Operations and Maintenance Expense
    
    
    20,409
    
    
    
    2,582
    
    
    
    1,460
    
    
    
    (26
    )
    
    
    24,425Depreciation Expense
    
    
    6,958
    
    
    
    1,965
    
    
    
    
    
    
    
    
    
    
    
    8,923Taxes, Other Than Income Taxes
    
    
    6,614
    
    
    
    610
    
    
    
    53
    
    
    
    
    
    
    
    7,277Operating Income
    
    
    15,748
    
    
    
    9,433
    
    
    
    477
    
    
    
    
    
    
    
    25,658Interest Income (Expense)  Net
    
    
    (3,467
    )
    
    
    (4,607
    )
    
    
    (224
    )
    
    
    
    
    
    
    (8,298
    )Allow. for Borrowed Funds Used
During Construction
    
    
    122
    
    
    
    1,109
    
    
    
    
    
    
    
    
    
    
    
    1,231Less: Minority Interest
    
    
    (210
    )
    
    
    (544
    )
    
    
    
    
    
    
    
    
    
    
    (754
    )Income Before Income Taxes
    
    $
    12,193
    
    
    $
    5,391
    
    
    $
    253
    
    
    
    
    
    
    $
    17,837Capital Expenditures
    
    $
    9,108
    
    
    $
    6,626
    
    
    $
    (60
    )
    
    
    
    
    
    $
    15,674Property, Plant, and Equipment, Net
    
    $
    123,785
    
    
    $
    81,407
    
    
    
    
    
    
    
    
    
    
    $
    205,192Total Assets
    
    $
    137,085
    
    
    $
    86,819
    
    
    $
    12,984
    
    
    
    
    
    
    $
    236,888
  Gas Revenue (in thousands):
    
    Natural Gas
    
    
    Natural Gas
    
    
    Intercompany
    
    
    Natural GasSeptember 30, 2005
    
    Distribution
    
    
    Storage
    
    
    Eliminations
    
    
    TotalSales :Residential
    
    $
    66,701
    
    
    
    
    
    
    
    
    
    
    $
    66,701Commercial and Industrial  Small
    
    
    19,717
    
    
    
    
    
    
    
    
    
    
    
    19,717Commercial and Industrial  Large
    
    
    10,502
    
    
    
    
    
    
    
    
    
    
    
    10,502Transportation
    
    
    7,147
    
    
    $
    2,773
    
    
    
    
    
    
    
    9,920Storage
    
    
    
    
    
    
    16,584
    
    
    $
    (4,201
    )
    
    
    12,383Other Gas
    
    
    763
    
    
    
    
    
    
    
    
    
    
    
    763Operating Revenue per Business Segment
    
    
    104,830
    
    
    
    19,357Intercompany eliminations
    
    
    
    
    
    
    (4,201
    )Total Gas
Revenue 
Item 6.  Selected Financial Data
    
    $
    104,830
    
    
    $
    15,156
    
    
    
    
    
    
    $
    119,986
 Gas Revenue (in thousands):
    
    Natural Gas
    
    
    Natural Gas
    
    
    Intercompany
    
    
    Natural GasSeptember 30, 2004
    
    Distribution
    
    
    Storage
    
    
    Eliminations
    
    
    TotalSales :Residential
    
    $
    64,283
    
    
    
    
    
    
    
    
    
    
    $
    64,283Commercial and Industrial  Small
    
    
    17,100
    
    
    
    
    
    
    
    
    
    
    
    17,100Commercial and Industrial  Large
    
    
    8,696
    
    
    
    
    
    
    
    
    
    
    
    8,696Transportation
    
    
    7,026
    
    
    $
    2,773
    
    
    
    
    
    
    
    9,799Storage
    
    
    
    
    
    
    14,994
    
    
    $
    (4,189
    )
    
    
    10,805Other Gas
    
    
    805
    
    
    
    
    
    
    
    
    
    
    
    805Operating Revenue per Business Segment
    
    
    97,910
    
    
    
    17,767Intercompany eliminations
    
    
    
    
    
    
    (4,189
    )Total Gas
Revenue 
Item 6.  Selected Financial Data
    
    $
    97,910
    
    
    $
    13,578
    
    
    
    
    
    
    $
    111,488
 F-29




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##### Table of Contents



Gas Revenue (in thousands):
    
    Natural Gas
    
    
    Natural Gas
    
    
    Intercompany
    
    
    Natural GasSeptember 30, 2003
    
    Distribution
    
    
    Storage
    
    
    Eliminations
    
    
    TotalSales :Residential
    
    $
    54,470
    
    
    
    
    
    
    
    
    
    
    $
    54,470Commercial and Industrial  Small
    
    
    13,795
    
    
    
    
    
    
    
    
    
    
    
    13,795Commercial and Industrial  Large
    
    
    8,101
    
    
    
    
    
    
    
    
    
    
    
    8,101Transportation
    
    
    7,444
    
    
    $
    2,987
    
    
    $
    (26
    )
    
    
    10,405Storage
    
    
    
    
    
    
    11,603
    
    
    
    (4,202
    )
    
    
    7,401Other Gas
    
    
    978
    
    
    
    
    
    
    
    
    
    
    
    978Other Non-Gas
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Operating Revenue per Business Segment
    
    
    84,790
    
    
    
    14,590Intercompany eliminations
    
    
    
    
    
    
    (4,228
    )Other Non-Gas
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )Total Gas
Revenue 
Item 6.  Selected Financial Data
    
    $
    84,788
    
    
    $
    10,362
    
    
    
    
    
    
    $
    95,150
 11. QUARTERLY FINANCIAL DATA (Unaudited)
 
 Three Months Ended
    
    Dec. 31
    
    
    Mar. 31
    
    
    Jun. 30
    
    
    Sep. 30Fiscal 2005Total Operating Revenues
    
    $
    36,367
    
    
    $
    44,099
    
    
    $
    22,350
    
    
    $
    21,790Total Operating Income
    
    
    8,988
    
    
    
    12,955
    
    
    
    4,193
    
    
    
    4,448Net Income
    
    
    4,316
    
    
    
    6,795
    
    
    
    1,457
    
    
    
    1,273Basic
Earnings Per Share (1)
    
    $
    0.55
    
    
    $
    0.87
    
    
    $
    0.19
    
    
    $
    0.16Diluted
Earnings Per Share (1)
    
    $
    0.54
    
    
    $
    0.85
    
    
    $
    0.18
    
    
    $
    0.16Fiscal 2004Total Operating Revenues
    
    $
    32,716
    
    
    $
    42,845
    
    
    $
    20,996
    
    
    $
    19,415Total Operating Income
    
    
    8,737
    
    
    
    12,449
    
    
    
    4,203
    
    
    
    3,408Net Income
    
    
    4,068
    
    
    
    6,372
    
    
    
    1,298
    
    
    
    830Basic Earnings Per Share
    
    $
    0.53
    
    
    $
    0.82
    
    
    $
    0.17
    
    
    $
    0.10Diluted Earnings Per Share
    
    $
    0.52
    
    
    $
    0.81
    
    
    $
    0.17
    
    
    $
    0.10
   F-30




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##### Table of Contents



COLUMN A
    
    COLUMN B
    
    
    COLUMN C
    
    
    COLUMN D
    
    
    COLUMN EADDITIONSCHARGED
    
    
    CHARGEDBALANCE AT
    
    
    TO COSTS
    
    
    TO OTHER
    
    
    
    
    
    
    BALANCEBEGINNING
    
    
    AND
    
    
    ACCOUNTS
    
    
    DEDUCTIONS
    
    
    AT ENDDESCRIPTION
    
    OF YEAR
    
    
    EXPENSES
    
    
    AMOUNT
    
    
    AMOUNT
    
    
    OF YEARReserves deducted from assets
to which they apply:Allowance for Doubtful AccountsSeptember 30, 2005
    
    $
    856
    
    
    $
    868
    
    
    
    
    
    
    $
    695
    (1)
    
    $
    1,029September 30, 2004
    
    $
    889
    
    
    $
    924
    
    
    
    
    
    
    $
    957
    (1)
    
    $
    856September 30, 2003
    
    $
    951
    
    
    $
    576
    
    
    
    
    
    
    $
    638
    (1)
    
    $
    889
  
 (1)
    
    Amounts written off  net of recoveries. S-1




---



##### Table of Contents



Exhibit No.
    
    Description (Exhibits prior to February 2, 1998 filed by Mobile Gas)2
    
    Articles of Merger of MBLE Merger Co., Inc. into Mobile Gas Service
Corporation (incorporated by reference to Exhibit 2 to Form 10-Q Quarterly
Report dated February 13, 1998)3(i)
    
    Restated Articles of Incorporation of EnergySouth, Inc. (incorporated
by reference to Exhibit 3(i) to Form 10-Q Quarterly Report dated February 2,
2005)3(ii)
    
    By-laws of EnergySouth, Inc., adopted January 31, 1998 (incorporated
by reference to Exhibit 3.2 to Registration Statement 333-42057)4(a)-1
    
    Indenture of Mortgage and Deed of Trust of Mobile Gas Service Corporation dated as
of December 1, 1941 (incorporated by reference to Exhibit B-a to Mobile Gas Registration
Statement No. 2-4887)
 Sup. Ind.Dated as of
    
    File Reference
    
    Exhibit4(a)-2
    
    
    
    10/1/44
    
    Reg. No. 2-5493
    
    7-64(a)-3
    
    
    
    7/1/52
    
    Form 10-K for fiscal year
ended September 30, 1985
    
    4(a)-34(a)-4
    
    
    
    6/1/54
    
    
    
    4(a)-44(a)-5
    
    
    
    4/1/57
    
    
    
    4(a)-54(a)-6
    
    
    
    7/1/61
    
    
    
    4(a)-64(a)-7
    
    
    
    6/1/63
    
    
    
    4(a)-74(a)-8
    
    
    
    10/1/64
    
    
    
    4(a)-84(a)-9
    
    
    
    7/1/72
    
    
    
    4(a)-94(a)-10
    
    
    
    8/1/75
    
    
    
    4(a)-104(a)-11
    
    
    
    7/1/79
    
    
    
    4(a)-114(a)-12
    
    
    
    7/1/82
    
    
    
    4(a)-124(a)-13
    
    
    
    7/1/86
    
    Form 10-K for fiscal year
ended September 30, 1986
    
    4(a)-134(a)-14
    
    
    
    10/1/88
    
    Form 10-K for fiscal year
ended September 30, 1989
    
    4(a)-144(a)-15
    
    
    
    7/1/92
    
    Form 10-K for fiscal year
ended September 30, 1992
    
    4(a)-154(a)-16
    
    
    
    7/1/93
    
    Form 10-K for fiscal year
ended September 30, 1993
    
    4(a)-16
 E-1




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##### Table of Contents



Sup. Ind.Dated as of
    
    File Reference
    
    Exhibit4(a)-17
    
    12/3/93
    
    Form 10-K for fiscal year
ended September 30, 1993
    
    4(a)-174(a)-18
    
    11/1/96
    
    Form 10-K for fiscal year
ended September 30, 1997
    
    4(a)-184(a)-19
    
    8/1/02
    
    Form 10-K for fiscal year
ended September 30, 2002
    
    4(a)-19
 4(c)-3
    
    Trust Indenture and Security Agreement dated as of December 1, 2000 made by Bay Gas Storage
Company, Ltd. (incorporated by reference to Exhibit 4(c)-3 to Form 10-Q for the quarter ended
December 31, 2000)4(d)
    
    Promissory Note to the Utilities Board of the Town of Citronelle dated May 13, 1993
(incorporated by reference to Exhibit 4(d) to Form 10-K for fiscal year ended September 30,
1993)10(a)
    
    Transportation agreement between Mobile Gas Service Corporation and Alabama Power Company
dated February 18, 1999 (incorporated by reference to Exhibit 10(a) to Form 10-Q for the
quarter ended March 31, 1999) (3)10(b)
    
    Agreement for Firm and Interruptible Storage Service between Bay Gas Storage Company, Ltd.
and Southern Company Services, Inc., as agent, dated April 1, 1999 (incorporated by reference
to Exhibit 10(b) to Form 10-Q for the quarter ended March 31, 1999) (3)10(b)-1
    
    Letter agreement dated July 19, 2000, modifying Agreement for Firm and Interruptible
Storage Services between Bay Gas Storage Company, Ltd. and Southern Company Services, Inc., as
agent, dated April 1, 1999 (incorporated by reference to Exhibit 10(b)-1 to Form 10-K for
fiscal year ended September 30, 2000) (3)10(b)-2
    
    Storage Service Agreement between Bay Gas Storage Company, Ltd. and Southern Company
Services, Inc., as agent, dated as of August 1, 2000 (incorporated by reference to Exhibit
10(b)-2 to Form 10-K for fiscal year ended September 30, 2000) (3)10(c)
    
    Agreement for Firm Intrastate Transportation Services between Bay Gas Storage Company, Ltd.
and Alabama Power Company dated April 8, 1999 (incorporated by reference to Exhibit 10(c) to
Form 10-Q for the quarter ended March 31, 1999) (3)10(c)-1
    
    Letter agreement dated July 19, 2000, modifying Agreement for Firm Intrastate
Transportation Services between Bay Gas Storage Company, Ltd. and Alabama Power Company dated
April 8, 1999 (incorporated by
 E-2




---



##### Table of Contents



reference to Exhibit 10(c)-1 to Form 10-K for fiscal year ended
September 30, 2000)(3)10(d)-5
    
    NNS Settlement Agreement between Koch Gateway Pipeline Company and Mobile Gas Service
Corporation dated March 26, 1998 (incorporated by reference to Exhibit 10(d)-5 to Form 10-K
for fiscal year ended September 30, 1998)10(e)
    
    Storage Service Agreement between Bay Gas Storage Company, Ltd. and Florida Power and Light
Company dated as of July 19, 2005 (1)(3)10(g)
    
    Deferred Compensation Agreement with John S. Davis dated January 26,
1996 (incorporated by reference to Exhibit 10(g) to Form 8-K Current
Report dated February 7, 1996)10(g)-1
    
    Supplemental Deferred Compensation Agreement with John S. Davis dated December 10, 1999
(incorporated by reference to Exhibit 10(g)-1 to Form 10-K for fiscal year ended September 30,
1999) (2)10(h)
    
    Transportation Agreement between Mobile Gas and Mobile Energy LLC dated November 12, 1999
(incorporated by reference to Exhibit 10(h) to Form 10-K for fiscal year ended September 30,
1999) (3)10(i)
    
    Mobile Gas Service Corporation/Bay Gas Storage Company, Ltd. Gas Storage Agreement dated
February 26, 1992 (incorporated by reference to Exhibit 10(i) to Form 10-K for fiscal year
ended September 30, 1992)10(j)
    
    Directors/Officers Indemnification Agreement (incorporated by reference to Exhibit 10(j)
to Form 10-K for fiscal year ended September 30, 1992)10(j)-1
    
    Form of Change of Control Agreement entered into as of December 8, 1999 by and between
EnergySouth, Inc. and the Executive Officers of EnergySouth, Inc. and/or one or more of its
subsidiaries (incorporated by reference to Exhibit 10(j)-1 to Form 10-K for fiscal year ended
September 30, 1999) (2)10(k)-1
    
    Amended and Restated Supplemental Deferred Compensation Agreement with Walter L. Hovell,
dated December 11, 1992 (incorporated by reference to Exhibit 10(k) to Form 10-K for fiscal
year ended September 30, 1992)(2)10(k)-2
    
    Amendment to Amended and Restated Supplemental Deferred Compensation Agreement dated
January 27, 1995 between the Company and Walter L. Hovell (incorporated by reference to
Exhibit 10(k)-2 to Form 8-K Current Report dated January 27, 1995)(2)10(l)-1
    
    Bay Gas Agreement by and among Mobile Gas Service Corporation, MGS Storage Services, Inc.,
MGS Energy Services, Inc. and Olin Corporation, dated December 5, 1991 (incorporated by
reference to Exhibit 10(l) to Form 10-K for fiscal year ended September 30, 1992)
 E-3




---



##### Table of Contents



10(m)-1
    
    Limited Partnership Agreement between MGS Storage Services, Inc., as General Partner, and
MGS Energy Services, Inc., as Limited Partner (forming Bay Gas Storage Company, Ltd.), dated
December 5, 1991 (incorporated by reference to Exhibit 10(m) to Form 10-K for fiscal year
ended September 30, 1992)10(m)-2
    
    First Amendment to Limited Partnership Agreement dated as of April 6, 1992 and Second
Amendment to Limited Partnership Agreement dated as of September 12, 1994 (incorporated by
reference to Exhibit 10(m)-2 to Form 10-K for fiscal year ended September 30, 1994)10(n)-1
    
    Cavity Development and Storage Agreement between Olin Corporation and Bay Gas Storage
Company, Ltd., dated January 14, 1992 (incorporated by reference to Exhibit 10(n) to Form
10-K for fiscal year ended September 30, 1992)10(n)-2
    
    Fourth Amendment to Cavity Development and Storage Agreement between Olin Corporation and
Bay Gas Storage Company, Ltd., dated July 30, 2004 (3)10(o)-1
    
    Transportation Agreement between Mobile Gas Service Corporation and Tuscaloosa Steel
Corporation dated as of May 15, 1995 (incorporated by reference to Exhibit 10(o) to Form 10-K
for fiscal year ended September 30, 1995)(3)10(o)-2
    
    Amendment dated August 23, 1996 to Transportation Agreement between Mobile Gas Service
Corporation and Tuscaloosa Steel Corporation (incorporated by reference to Exhibit 10(o)-2 to
Form 10-K for fiscal year ended September 30, 1996) (3)10(o)-3
    
    Termination agreement dated July 28, 2005 between Mobile Gas Service Corporation and
Tuscaloosa Steel Corporation (1)10(q)-1
    
    Guaranty Agreement dated as of December 1, 2000 made by EnergySouth, Inc., relating to
Trust Indenture and Security Agreement made by Bay Gas Storage Company, Ltd. (incorporated by
reference to Exhibit 10(q)-1 to Form 10-Q for the quarter ended December 31, 2000)10(r)
    
    Amended and Restated Stock Option Plan of EnergySouth, Inc. (incorporated by reference to
Appendix A to definitive proxy statement dated December 17, 1998)(2)10(r)-2
    
    2003 Stock Option Plan of EnergySouth, Inc. (incorporated by reference to Appendix A to
definitive proxy statement dated December 23, 2003) (2)10(s)
    
    Mobile Gas Service Corporation Incentive Compensation Plan (incorporated by reference to
Exhibit B to definitive proxy statement dated December 21, 1992)(2)(4)
 E-4




---



##### Table of Contents



10(t)
    
    Agreement for Purchase and Sale of Assets by and between The Utilities Board of the Town
of Citronelle and Mobile Gas Service Corporation dated January 28, 1993 (incorporated by
reference to Exhibit 10(t) to Form 10-K for fiscal year ended September 30, 1993)10(v)-1
    
    Revolving Credit Agreement dated January 31, 2005 by and among EnergySouth, Inc. as
Borrower, Regions Bank as Agent and Regions Bank, AmSouth Bank, and SouthTrust Bank as Lenders
(1)10(x)
    
    Letter dated October 7, 1994 from Mobile Gas Service Corporation to John S. Davis
confirming terms of employment (incorporated by reference to Exhibit A to Form 8-K current
report filed November 2, 1994)(2)10(z)-2
    
    2 nd Amended and Restated EnergySouth, Inc. Non-Employee Directors Deferred Fee
Plan (incorporated by reference to Exhibit 99.1 to Scheduel S-8 filed April 1, 2004)(2)14
    
    Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14 to Form 10-K
for fiscal year ended September 30, 2003)18
    
    Letter regarding change in Accounting Principle (incorporated by reference to Exhibit 18 to
Form 10-Q Quarterly Report dated February 12, 1999)21
    
    Subsidiaries of Registrant and Partnerships in which Registrant Owns an
Interest(1)23
    
    Consent of Deloitte & Touche LLP(1)31.1
    
    Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  Chief Executive
Officer (1)31.2
    
    Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  Chief Financial
Officer (1)32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002  Chief Executive Officer (1)32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002  Chief Financial Officer (1)99(a)
    
    Report and Order of Alabama Public Service Commission dated October 3, 2001 (incorporated by
reference to Exhibit 99(a) to Form 8-K current report filed October 18, 2001)
 
 (1)
    
    Filed herewith.(2)
    
    Management contract or compensatory plan or arrangement. E-5




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##### Table of Contents



(3)
    
    Confidential portions of this exhibit have been omitted and previously filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 promulgated under the Securities
Exchange Act of 1934, as amended.(4)
    
    Amended to use Company Common Stock instead of Mobile Gas common stock effective
February 2, 1998. E-6