<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE YEAR ENDED SEPTEMBER 30, 1999

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM        TO
                                                             ------    -------

<TABLE>
<CAPTION>
COMMISSION                                                    IRS EMPLOYER
   FILE                                 STATE OF             IDENTIFICATION
  NUMBER          REGISTRANT          INCORPORATION              NUMBER
--------------------------------------------------------------------------------
<S>           <C>                     <C>                   <C>
1-7810        Energen Corporation        Alabama                 63-0757759
2-38960       Alabama Gas Corporation    Alabama                 63-0022000
</TABLE>

                              605 21st Street North
                         Birmingham, Alabama 35203-2707
                                 (205) 326-2700
                             http://www.energen.com

           Securities Registered Pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
TITLE OF EACH CLASS                                      EXCHANGE ON WHICH REGISTERED
-------------------                                      ----------------------------
<S>                                                      <C>
Energen Corporation Common Stock, $0.01 par value        New York Stock Exchange
Energen Corporation Preferred Stock Purchase Rights      New York Stock Exchange
</TABLE>

        Securities Registered Pursuant to Section 12(g) of the Act: NONE

Indicate by a check mark whether registrants (1) have filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrants
were required to file such reports) and (2) have been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

Aggregate market value of the voting stock held by non-affiliates of the
registrants as of December 10, 1999:
          Energen Corporation                         $502,934,966

Indicate number of shares outstanding of each of the registrant's classes of
common stock as of December 10, 1999:

<TABLE>
           <S>                                   <C>
           Energen Corporation                   30,098,383 shares
           Alabama Gas Corporation                1,972,052 shares
</TABLE>

Alabama Gas Corporation meets the conditions set forth in General Instruction
I(1) (a) and (b) of Form 10-K and is therefore filing this form with the reduced
disclosure format pursuant to General Instruction I(2).

                       DOCUMENTS INCORPORATED BY REFERENCE
- Energen Corporation Proxy Statement to be filed on or about December 22, 1999
  (Part III, Item 10-13)
- Portions of Energen Corporation 1999 Annual Report to are incorporated by
  reference into Part II, Items 5, 6, 7, and 8 of this report


<PAGE>   2



                               ENERGEN CORPORATION
                          1999 FORM 10-K ANNUAL REPORT


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----

                                     PART I

<S>       <C>                                                                    <C>
Item 1.   Business..................................................................3

Item 2.   Properties................................................................8

Item 3.   Legal Proceedings.........................................................9

Item 4.   Submission of Matters to a Vote of Security Holders.......................9


                                     PART II

Item 5.   Market for Registrant's Common Stock and Related Stockholder Matters.....12

Item 6.   Selected Financial Data..................................................12

Item 7.   Management's Discussion and Analysis of Results of Operations
          and Financial Condition..................................................12

Item 7a.  Quantitative and Qualitative Disclosures about Market Risk...............12

Item 8.   Financial Statements and Supplementary Data..............................13

Item 9.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure.................................................13


                                    PART III

Item 10.  Directors and Executive Officers of the Registrants......................14

Item 11.  Executive Compensation...................................................14

Item 12.  Security Ownership of Certain Beneficial Owners and Management...........14

Item 13.  Certain Relationships and Related Transactions...........................14


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.........15
</TABLE>




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<PAGE>   3

    This Form 10-K is filed on behalf of Energen Corporation (Energen or the
                Company) and Alabama Gas Corporation (Alagasco).

FORWARD-LOOKING STATEMENTS AND RISK: Certain statements in this report regarding
future plans, objectives and expected performance of the Company and its
subsidiaries, are made pursuant to the Safe Habor provision of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
based on assumptions the Company believes are reasonable; however, a variety of
events, risks and uncertainties that may be outside the Company's control could
cause actual results to differ materially from those anticipated. Some of these
include, but are not limited to, economic and competitive conditions, inflation
rates, regulatory changes, financial market conditions, future business
decisions, Year 2000 issues and other uncertainties, all of which are difficult
to predict. There are numerous uncertainties inherent in estimating quantities
of proved oil and gas reserves and in projecting future rates of production and
timing of development expenditures. The total amount or timing of actual future
production may vary significantly from reserves and production estimates. In the
event the Company is unable to fully invest its planned acquisition, development
and exploratory expenditures, future operating revenues, production, and proved
reserves could be negatively affected. The drilling of development and
exploratory wells can involve significant risk, including that related to
timing, success rates and cost overruns. These risks can be impacted by lease
and rig availability, complex geology and other factors. Results of operations
and cash flows also could be affected by future oil and gas prices. Although the
Company makes use of futures, swaps and fixed-price contracts to mitigate risk,
fluctuations in oil, gas and natural gas liquids prices may affect the Company's
financial position and results of operation.

PART I

ITEM 1.  BUSINESS

GENERAL

Energen Corporation is a Birmingham-based diversified energy holding company
engaged primarily in the purchase, distribution, and sale of natural gas,
principally in central and north Alabama, and in the acquisition, development,
exploration and production of oil, gas and natural gas liquids in the
continental United States. Its two major subsidiaries are Alabama Gas
Corporation (Alagasco) and Energen Resources Corporation.

Energen was incorporated in Alabama in 1978 in connection with the
reorganization of its largest subsidiary, Alagasco. Alagasco was formed in 1948
by the merger of Alabama Gas Company into Birmingham Gas Company, the
predecessors of which had been in existence since the mid-1800s. Alagasco became
a public company in 1953. Energen Resources was formed in 1971 as a subsidiary
of Alagasco and became a subsidiary of Energen in the 1978 reorganization.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The information required by this item is incorporated by reference from Note 17,
Industry Segment Information, to the Consolidated Financial Statements of the
1999 Annual Report to Shareholders and is attached herein as Part IV, Item 14,
Exhibit 13.

NARRATIVE DESCRIPTION OF BUSINESS

-        NATURAL GAS DISTRIBUTION

         GENERAL: Alagasco is the largest natural gas distribution utility in
         the state of Alabama. Alagasco purchases natural gas through interstate
         and intrastate marketers and suppliers and distributes the purchased
         gas through its distribution facilities for sale to residential,
         commercial and industrial customers and other end-users of natural gas.
         Alagasco also provides transportation services to industrial and
         commercial customers located on its distribution system. These
         transportation customers, using Alagasco as their agent or acting on
         their own,



                                       3
<PAGE>   4

         purchase gas directly from producers, marketers or suppliers and
         arrange for delivery of the gas into the Alagasco distribution system;
         Alagasco charges a fee to transport this customer-owned gas through its
         distribution system to the customer's facility.

         Alagasco's service territory is located in central and parts of north
         Alabama and includes approximately 185 cities and communities in 27
         counties. The aggregate population of the counties served by Alagasco
         is estimated to be 2.3 million. Among the cities served by Alagasco are
         Birmingham, the center of the largest metropolitan area in Alabama, and
         Montgomery, the state capital. During fiscal year 1999, Alagasco served
         an average of 425,937 residential customers and 35,111 commercial,
         industrial and transportation customers.

         The Alagasco distribution system includes approximately 9,180 miles of
         main and more than 10,650 miles of service lines, odorization and
         regulation facilities, and customer meters. Alagasco also operates two
         liquified natural gas (LNG) facilities that it uses to meet peak
         demand.

         APSC REGULATION: As an Alabama utility, Alagasco is subject to
         regulation by the Alabama Public Service Commission (APSC). Alagasco's
         rate-setting process, Rate Stabilization and Equalization (RSE), was
         established by the APSC in 1983, and extended with modifications in
         1985, 1987 and 1990. On October 7, 1996, RSE was extended, without
         change, for a five-year period through January 1, 2002. Under the terms
         of the extension, RSE will continue after January 1, 2002, unless,
         after notice to the Company and a hearing, the APSC votes to modify or
         discontinue its operation. RSE replaced the traditional utility rate
         case with quarterly reviews and adjustments designed to give Alagasco
         an opportunity to earn a return on average equity at year-end within a
         designated range, which presently is 13.15 percent to 13.65 percent.
         Alagasco has earned at or near its allowed range since fiscal 1990 when
         the APSC modified RSE to include a forward-looking test year and
         approved a temperature adjustment rider to Alagasco's rate tariff.

         Under RSE as extended, the APSC conducts quarterly reviews to
         determine, based on Alagasco's projections and fiscal year-to-date
         performance, whether Alagasco's return on equity for the fiscal year
         will be within the allowed range. Reductions in rates can be made
         quarterly to bring the projected return within the allowed range;
         increases, however, are allowed only once each fiscal year, effective
         December 1, and cannot exceed 4 percent of prior-year revenues. RSE
         limits the utility's equity upon which a return is permitted to 60
         percent of total capitalization and provides for certain cost control
         measures designed to monitor Alagasco?s operations and maintenance
         (O&M) expenses. If the change in O&M per customer falls within 1.25
         percentage points above or below the Consumer Price Index for All Urban
         Customers (index range), no adjustment is required. If the change in
         O&M per customer exceeds the index range, three-quarters of the
         difference is returned to customers. To the extent the change is less
         than the index range, the utility benefits by one-half of the
         difference through future rate adjustments.

         The temperature adjustment rider to Alagasco's rate tariff, approved by
         the APSC in 1990, was designed to mitigate the earnings impact of
         variances from normal temperatures. Alagasco performs this real-time
         temperature adjustment calculation monthly, and the adjustments to
         customers' bills are made in the same billing cycle in which the
         weather variation occurs. Substantially all the customers to whom the
         temperature adjustment applies are residential, small commercial and
         small industrial. Alagasco's rate schedules for natural gas
         distribution charges contain a Gas Supply Adjustment (GSA) rider,
         established in 1993, which permits the pass-through to customers of
         changes in the cost of gas supply.

         The APSC approved an Enhanced Stability Reserve (ESR), beginning fiscal
         year 1998, to which Alagasco may charge the full amount of: (1)
         extraordinary O&M expenses resulting from force majeure events such as
         storms, severe weather, and outages, when one or a combination of two
         such events results in more than $200,000 of additional O&M expense
         during a fiscal year; and (2) individual industrial and commercial
         customer revenue losses that exceed $250,000 during the fiscal year, if
         such losses cause Alagasco's return on equity to fall below 13.15
         percent. The APSC approved the reserve on October 6, 1998, in the
         amount of $3.9 million; the maximum approved funding level of the ESR
         is $4 million. Following a year in which a charge against the ESR is
         made, the APSC provides for accretions to the ESR in an amount of no
         more than $40,000 monthly until



                                       4
<PAGE>   5

         the maximum funding level is achieved. The APSC will re-evaluate the
         operation of the ESR following the conclusion of Alagasco's fiscal year
         2000.

         GAS SUPPLY: Alagasco's distribution system is connected to and has firm
         transportation contracts with two major interstate pipeline systems '
         Southern Natural Gas Company (Southern) and Transcontinental Gas Pipe
         Line Corporation (Transco). On Southern's system, Alagasco has 251,679
         Mcfd (thousand cubic feet per day) of No-Notice Firm Transportation
         service through October 31, 2008, and 40,000 Mcfd and 92,373 Mcfd of
         Firm Transportation service through April 30, 2002 and October 31,
         2008, respectively. Alagasco also has 12,464,074 Mcf of storage
         capacity on Southern's system, with a maximum withdrawal rate of
         251,679 Mcfd from storage and a maximum injection rate of 95,878 Mcfd
         to storage. The Transco Firm Transportation contract, which expires
         October 31, 2002, provides for up to 100,000 Mcfd. As a result,
         Alagasco has a peak day firm interstate pipeline transportation
         capacity of 484,052 Mcfd.

         Alagasco purchases gas from various gas producers and marketers,
         including affiliates of Southern and Transco, and from certain
         intrastate producers and marketers. Alagasco has contracts in place to
         purchase up to 300,703 Mcfd of firm supply, of which 232,373 Mcfd is
         supported by firm transportation on the Transco and Southern systems
         and approximately 23,600 Mcfd is purchased at the city gate under
         intrastate firm supply contracts. These firm supply volumes along with
         Alagasco's maximum withdrawal from storage of 251,679 Mcfd and LNG
         peak-shaving capacity of 200,000 Mcfd, give Alagasco a peak day firm
         supply of 752,382 Mcfd. Alagasco also utilizes the Southern and Transco
         pipeline systems to access spot market gas in order to supplement its
         firm system supply and serve its industrial and large commercial
         transportation customers. Deliveries of sales and transportation gas
         totaled 102,769 million cubic feet (MMcf) in fiscal 1999.

         RATE FLEXIBILITY AND COMPETITION: The price of natural gas is a
         significant competitive factor in Alagasco's service territory,
         particularly among large commercial and industrial transportation
         customers. Propane, coal and fuel oil readily are available, and many
         industrial customers have the capability to switch to alternate fuels
         and/or alternate sources of gas. In the residential and small
         commercial and industrial markets, electricity is the principal
         competitor. With the support of the APSC, Alagasco has implemented a
         variety of flexible rate strategies to help it compete for the large
         customers' gas load in the deregulated marketplace. Rate flexibility
         remains critical as the utility faces competition for the large
         customer load. To date, the utility has been effective in utilizing its
         flexible rate strategies to minimize bypass and price-based switching
         to alternate fuels and alternate sources of gas.

         In 1994 Alagasco implemented the P Rate in response to the competitive
         challenge of interstate pipeline capacity release. Under this tariff
         provision, Alagasco releases much of its excess pipeline capacity and
         repurchases it as agent for its transportation customers under 12 month
         contracts. The transportation customers benefit from lower pipeline
         costs. Alagasco's core market customers benefit, as well, since the
         utility uses the revenues received from the P Rate to decrease gas
         costs for its residential and small commercial and industrial
         customers. In fiscal 1999, approximately 300 of Alagasco's
         transportation customers utilized the P Rate, and the resulting
         reduction in core market gas costs totaled approximately $9.2 million.

         The Competitive Fuel Clause (CFC) and Transportation Tariff also have
         been important to Alagasco's ability to compete effectively for
         customer load in its service territory. The CFC allows Alagasco to
         adjust large customer rates on a case-by-case basis to compete with
         alternate fuels and alternate sources of gas. The GSA rider to
         Alagasco's tariff allows the Company to recover the reduction in
         charges allowed under the CFC because the retention of any customer,
         particularly large commercial and industrial transportation customers,
         benefits all customers by recovering a portion of the system's fixed
         costs. The Transportation Tariff allows Alagasco to transport gas for
         customers rather than buy and resell it to them. The Transportation
         Tariff is based on Alagasco's sales profit margin, so operating margins
         are unaffected. During 1999 substantially all of Alagasco's large
         commercial and industrial customer deliveries were the transportation
         of customer-owned gas. In addition, Alagasco served as gas purchasing
         agent for approximately 99 percent of its transportation customers.
         Alagasco also uses long-term special contracts as a vehicle for
         retaining large customer load. At the end of fiscal year 1999, 40 of
         the utility's largest commercial and industrial transportation
         customers were under special contracts of varying lengths.



                                       5
<PAGE>   6

         Natural gas service available to Alagasco customers falls into two
         broad categories: interruptible and firm. Interruptible service
         contractually is subject to interruption by Alagasco for various
         reasons; the most common occurrence is curtailment of industrial
         customers during periods of peak core market heating demand.
         Interruptible service typically is provided to large commercial and
         industrial transportation customers that can reduce their gas
         consumption by adjusting production schedules or by switching to
         alternate fuels for the duration of the service interruption. More
         expensive firm service, on the other hand, generally is not subject to
         interruption and is provided to residential and small commercial and
         industrial customers; these core market customers depend on natural gas
         primarily for space heating.

         GROWTH: Customer growth presents a major challenge for Alagasco, given
         its mature, slow-growth service area. Alagasco serves approximately 70
         percent of the potential customers located along its lines, and it
         consistently achieves penetration rates over 85 percent in the new
         single-family housing market. In fiscal year 1999, Alagasco had
         customer growth of approximately 1 percent. For fiscal year 2000,
         Alagasco will be working hard to increase gas usage by focusing on
         conversion prospects and by promoting, in addition to gas furnaces and
         water heaters, other energy-efficient natural gas products such as
         fireplace logs, outdoor gaslights, grills, ovens and cooktops. Beyond
         2000, Alagasco will assess the potential for distributed generation in
         its service area and pursue opportunities to invest in
         revenue-generating or cost-saving projects.

         A vehicle for supplementing Alagasco's normal growth continues to be
         Alagasco's municipal acquisition program. Since 1985, Alagasco has
         acquired 22 municipally owned systems, adding more than 42,000
         customers through initial system purchases and subsequent customer
         additions. Approximately 78 municipal systems remain in Alabama.
         Although Alagasco has not acquired any new municipal gas systems since
         1996, it continues to pursue the purchase of municipal gas systems, and
         company management believes that such acquisitions offer future growth
         opportunities.

         WEATHER: Alagasco's gas distribution business is highly seasonal since
         a material portion of the utility's total sales and delivery volumes is
         to customers (principally residential and small commercial and
         industrial) whose use varies depending upon temperature. Alagasco's
         rate tariff includes a temperature adjustment rider for certain core
         market customers which is designed to mitigate the effect of departures
         from normal temperature on Alagasco's earnings. The calculation is
         performed monthly, and adjustments are made to customers' bills in the
         actual month the weather variation occurs.

         ENVIRONMENTAL MATTERS: Alagasco is in the chain of title of eight
         former manufactured gas plant sites and five manufactured gas
         distribution sites. It still owns four of the plant sites and one of
         the distribution sites. Preliminary investigations indicate no need at
         present for remediation activities. Management expects that, should
         remediation of any such sites be required in the future, Alagasco's
         share of any associated costs will not materially affect the results of
         its operations or financial condition.

         OTHER: For a discussion of risks inherent in the Company's businesses,
         see Management's Discussion and Analysis in the 1999 Annual Report to
         Shareholders (pages 31 and 32), which is attached, herein, as Part IV,
         Item 14, Exhibit 13.

-        OIL AND GAS OPERATIONS

         GENERAL: Energen's oil and gas operations focus on increasing
         production and adding proved reserves through the acquisition and
         exploitation of oil and gas properties with varying levels of
         development potential. To a lesser extent, Energen Resources explores
         for and develops new reservoirs, primarily in areas in which it has an
         operating presence. Energen Resources also provides operating services
         in the Black Warrior Basin in Alabama for its partners and third
         parties. All current oil and gas operations are located in the
         continental United States.

         At the end of fiscal year 1999, Energen Resources' inventory of proved
         oil and gas reserves had reached a major milestone, breaking the 1
         trillion cubic feet equivalent mark. Approximately 93 percent of the
         company's



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<PAGE>   7

         1,020 billion cubic feet equivalent (Bcfe) of reserves are located in
         the San Juan Basin in New Mexico, the Black Warrior Basin in Alabama,
         the Permian Basin in west Texas, and the north Louisiana/east Texas
         region. Management believes that Energen Resources' reserve base is
         conservative in nature, with more than 78 percent of year-end reserves
         classified as proved developed; in addition, the reserve base is
         long-lived, with a reserves-to-production ratio of 13 at fiscal
         yearend. Natural gas represents approximately 73 percent of Energen
         Resources' reserves, with oil and natural gas liquids comprising the
         balance.

         GROWTH STRATEGY: Energen has completed four years under an aggressive
         strategy to grow its non-regulated oil and gas operations. Since the
         end of fiscal year 1995, Energen Resources has invested approximately
         $500 million in property acquisitions, $120 million in related
         development, and $80 million in exploration and associated development.
         As a result, its proved reserves have increased 972 percent, and its
         oil and gas production has increased more than 600 percent to over 77
         Bcfe. Over the next five years, Energen Resources plans to spend an
         estimated $1.1 billion, including $750 million to acquire producing
         properties, $260 million to exploit existing and newly acquired
         properties, and $60 million for exploration and associated development.

         Energen Resources' approach to the oil and gas business calls for the
         company to pursue onshore North American property acquisitions which
         offer significant amounts of proved undeveloped (PUD) and/or
         behind-pipe reserves as well as operational enhancement potential.
         Energen Resources prefers gas to oil properties, long-lived reserves
         and operated properties that offer multiple pay-zone exploitation
         opportunities. While preferring these criteria, Energen Resources does
         not preclude possible acquisitions of properties that otherwise meet
         its investment requirements.

         Energen Resources' most recent property acquisition was the October
         1998 purchase of TOTAL Minatome Corporation (TOTAL). Simultaneously
         upon closing the transaction, Energen Resources sold a 31 percent
         undivided interest in TOTAL's net assets to Westport Oil and Gas
         Company, Inc. Energen Resources' net adjusted price totaled
         approximately $137.5 million, including the assumption of certain legal
         and financial obligations, and net reserves acquired totaled
         approximately 200 Bcfe.

         Following an acquisition, Energen Resources focuses on increasing
         production and reserves through aggressive exploitation of the
         properties' PUD and behind-pipe reserve potential. These exploitation
         activities include development well drilling, behind-pipe
         recompletions, workovers, secondary recovery and operational
         enhancements. Energen Resources prefers to operate its properties in
         order to better control the nature and pace of exploitation activities.
         Energen Resources' exploitation activities can result in the addition
         of new reserves as well as serve to reclassify undeveloped reserves as
         developed ones.

         In the San Juan Basin, where Energen Resources acquired approximately
         319 Bcfe of natural gas and natural gas liquids in 1997, the company's
         exploitation efforts have added more than 170 Bcfe of reserves. Energen
         Resources also significantly increased its exploitation prospects with
         the acquisition of TOTAL's reserves which were approximately 45 percent
         PUDs and/or behind-pipe.

         In fiscal year 1999, Energen Resources' exploitation program added
         approximately 120 Bcfe of proved reserves. The company drilled 88
         successful development wells, performed 45 successful well
         recompletions and conducted other performance-related enhancements such
         that its exploitation-generated reserves more than replaced the
         company's production of 77.2 Bcfe.

         Most of Energen Resources' coalbed methane production generates
         nonconventional fuels tax credits through December 31, 2002, when the
         credits expire. In fiscal 1999, Energen Resources' nonconventional
         fuels tax credits totaled $14.8 million; and, in fiscal year 2002,
         Energen Resources expects to generate more than $11.5 million of the
         production credits. These credits have been instrumental in Energen
         Resources' successful development of large-scale coalbed methane
         projects in the Black Warrior Basin. As the tax credit expiration date
         approaches, Energen Resources' goal is to replace the tax credits with
         long-term, revenue-generating assets in a manner that does not
         negatively affect corporate earnings in fiscal year 2003 and beyond.



                                       7
<PAGE>   8

         RISK MANAGEMENT: Energen Resources attempts to lower the risk
         associated with its oil and gas business. A key component of the
         company's efforts to manage risk is its acquisition versus exploration
         orientation and its preference for long-lived reserves. To help reduce
         short-term commodity price risk, Energen Resources uses market-driven
         pricing estimates and hedging strategies. In pursuing an acquisition,
         Energen Resources uses in its evaluation models the then-current oil
         and gas futures prices, the prevailing swap curve and, for the
         longer-term, its own pricing assumptions. After a purchase, Energen
         Resources may use futures, swaps and/or fixed-price contracts to hedge
         targeted prices on a portion of the acquisition's flowing production.
         Typically, where used, such acquisition related hedges have been for 12
         to 36 months. On an on-going basis, Energen Resources may hedge up to
         80 percent of its flowing production in any given fiscal year depending
         on its pricing outlook. For fiscal 2000, Energen Resources has entered
         into contracts and swaps for 41.6 Bcf of its flowing gas production at
         an average contract price (before basis differentials) of $2.45 per Mcf
         and 1,732 MBbl of its oil production at an average contract price of
         $17.51 per barrel. In addition, the Company has hedged the basis
         difference on 12 Bcf of its fiscal 2000 San Juan Basin production. For
         fiscal 2001, Energen Resources entered into contracts and swaps for
         14.6 Bcf of its flowing gas production at an average contract price
         (before basis differentials) of $2.55 per Mcf. (See Item 7a,
         Quantitative and Qualitative Disclosures About Market Risk, and the
         Forward-Looking Statements and Risk in Item 7, Management's Discussion
         and Analysis of Financial Condition and Results of Operations, for
         further discussion with respect to price and other risk.)

         ENVIRONMENTAL MATTERS: Energen Resources is subject to various
         environmental regulations. Management believes that Energen Resources
         is in compliance with currently applicable standards of the
         environmental agencies to which it is subject and that potential
         environmental liabilities, if any, are minimal. Also, to the extent
         that Energen Resources has operating agreements with various joint
         venture partners, environmental costs, if any, would be shared
         proportionately.

         OTHER: For a discussion of risks inherent in the Company's businesses,
         see Management's Discussion and Analysis in the 1999 Annual Report to
         Shareholders (pages 31 and 32) which is attached herein as Part IV,
         Item 14, Exhibit 13.

EMPLOYEES

The Company has 1,399 employees; Alagasco employs 1,199; Energen Resources
employs 189; and Energen's other subsidiaries employ 11.

ITEM 2.  PROPERTIES

The corporate headquarters of Energen, Alagasco and Energen Resources are
located in leased office space in Birmingham, Alabama. In addition to its
corporate headquarters in Birmingham, Energen Resources maintains leased offices
in Houston and Midland, Texas, and in Farmington, New Mexico.

The properties of Alagasco consist primarily of its gas distribution system,
which includes more than 9,180 miles of main, more than 10,650 miles of service
lines, odorization and regulation facilities, and customer meters. Alagasco also
has two liquified natural gas facilities, seven division offices, eight payment
centers, five district offices, nine service centers, and other related property
and equipment, some of which are leased by Alagasco. For a further description
of Alagasco's properties, see discussion under Item 1--Business.

For a description of Energen Resources' oil and gas properties, see the
discussion under Item 1--Business. Information concerning Energen Resources'
production, reserves and development is included in Note 16, Oil and Gas
Producing Activities (unaudited), to the Consolidated Financial Statements which
is incorporated by reference from the 1999 Annual Report to Shareholders and
included in Part IV, Item 14, Exhibit 13, herein. The proved reserve estimates
are consistent with comparable reserve estimates filed by Energen Resources with
any federal authority or agency.



                                       8
<PAGE>   9

ITEM 3.  LEGAL PROCEEDINGS

Energen and its affiliates are, from time to time, parties to various pending or
threatened legal proceedings. Certain of these lawsuits include claims for
punitive damages in addition to other specific relief. Based upon information
presently available and in light of available legal and other defenses,
contingent liabilities arising from threatened and pending litigation are not
considered material in relation to the respective financial positions of Energen
and its affiliates. It should be noted, however, that Energen and its affiliates
conduct business in Alabama and other jurisdictions in which the magnitude and
frequency of punitive damage awards may bear little or no relation to
culpability or actual damages thus making it difficult to predict litigation
results.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of 1999.





























                                       9
<PAGE>   10


EXECUTIVE OFFICERS OF THE REGISTRANTS

ENERGEN CORPORATION

<TABLE>
<CAPTION>
       Name                  Age                     Position (1)
       ----                  ---                     ------------
<S>                          <C>    <C>
Wm. Michael Warren, Jr.      52     Chairman of the Board
                                    President and Chief Executive Officer (2)

Geoffrey C. Ketcham          48     Executive Vice President, Chief Financial
                                    Officer and Treasurer (3)

Gary C. Youngblood           56     President and Chief Operating Officer of
                                    Alagasco (4)

James T. McManus             41     President and Chief Operating Officer of
                                    Energen Resources (5)

Dudley C. Reynolds           46     General Counsel and Secretary (6)


J. David Woodruff, Jr.       43     Vice President-Legal and Assistant Secretary
                                    and Vice President-Corporate Development (7)

Grace B. Carr                44     Controller (8)
</TABLE>


<TABLE>
<S>      <C>      <C>
NOTES:   (1)      All executive officers of Energen except for Ms. Carr have
                  been employed by Energen or a subsidiary for the past five
                  years. Officers serve at the pleasure of its Board of
                  Directors.

         (2)      Mr. Warren has been employed by the Company in various
                  capacities since 1983. In January 1992 he was elected
                  President and Chief Operating Officer of Energen and all of
                  its subsidiaries, in October 1995 he was elected Chief
                  Executive Officer of Alagasco and Energen Resources, in
                  February 1997 he was elected Chief Executive Officer of
                  Energen, and effective January 1, 1998, he was elected
                  Chairman of the Board of Energen and each of its subsidiaries.
                  Mr. Warren serves as a Director of Energen and each of its
                  subsidiaries.

         (3)      Mr. Ketcham has been employed by the Company in various
                  capacities since 1981. He has served as Executive Vice
                  President, Chief Financial Officer and Treasurer of Energen
                  and each of its subsidiaries since April 1991.

         (4)      Mr. Youngblood has been employed by the Company in various
                  capacities since 1969. He was elected Executive Vice President
                  of Alagasco in October 1993, Chief Operating Officer of
                  Alagasco in October 1995, and President of Alagasco in April
                  1997.

         (5)      Mr. McManus has been employed by the Company in various
                  capacities since 1986. He was elected Vice President-Finance
                  and Corporate Development of Energen and Vice
                  President-Finance and Planning of Alagasco in April 1991. He
                  was elected Executive Vice President and Chief Operating
                  Officer of Energen Resources in October 1995 and President of
                  Energen Resources in April 1997.

         (6)      Mr. Reynolds has been employed by the Company in various
                  capacities since 1980. He has served as General Counsel and
                  Secretary of Energen and each of its subsidiaries since April
                  1991.
</TABLE>



                                       10
<PAGE>   11

<TABLE>
         <S>      <C>
         (7)      Mr. Woodruff has been employed by the Company in various
                  capacities since 1986. He has served as Vice President-Legal
                  and Assistant Secretary of Energen and each of its
                  subsidiaries since April 1991 and as Vice President-Corporate
                  Development of Energen since October 1995.

         (8)      Ms. Carr was employed by the Company in various capacities
                  from January 1985 to April 1989. She was not employed from
                  April 1989 through December 1997. She was elected Controller
                  of Energen in January 1998.
</TABLE>
































                                       11
<PAGE>   12


PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The information regarding Energen's common stock and the frequency and amount of
dividends paid during the past two years with respect to such stock is
incorporated by reference from the 1999 Annual Report to Shareholders, page 32,
and is included in Part IV, Item 14, Exhibit 13, herein. At December 10, 1999,
there were approximately 9,000 holders of record of Energen's common stock. For
restrictions on Energen's present and future ability to pay dividends, see Note
3 to the Consolidated Financial Statements which is incorporated by reference
from the 1999 Annual Report to Shareholders and included in Part IV, Item 14,
Exhibit 13, herein.

At the date of this filing, Energen Corporation owns all the issued and
outstanding common stock of Alabama Gas Corporation.

ITEM 6.  SELECTED FINANCIAL DATA

The information regarding selected financial data is incorporated by reference
from the 1999 Annual Report to Shareholders, pages 58-59, and is included in
Part IV, Item 14, Exhibit 13, herein.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION

This information is incorporated by reference from the 1999 Annual Report to
Shareholders, pages 25-32, and is included in Part IV, Item 14, Exhibit 13,
herein.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Energen Resources' major market risk exposure is in the pricing applicable to
its oil, gas and natural gas liquids production. Historically, prices received
have been volatile because of seasonal weather patterns, national supply and
demand factors and general economic conditions. Crude oil prices are also
affected by quality differentials, by worldwide political developments and by
actions of the Organization of Petroleum Exporting Countries. Basis
differentials, like the underlying commodity prices, can be volatile because of
regional supply and demand factors, including seasonal factors and the
availability and price of transportation to consuming areas.

Energen Resources enters into derivative commodity instruments to hedge its
exposure to oil and gas price fluctuations. Such instruments include regulated
natural gas and crude oil futures contracts traded on the New York Mercantile
Exchange and over-the-counter swaps and basis hedges with major energy
derivative product specialists. All hedge transactions are subject to the
Company's risk management policy, approved by the Board of Directors, which does
not permit speculative positions. These transactions are accounted for under the
hedge method of accounting. Under this method, any unrealized gains and losses
are recorded as a current receivable/payable with a corresponding deferred
gain/loss. Realized gains and losses are deferred as current liabilities or
assets until the revenues from the related hedged volumes are recognized in the
income statement. Cash flows from derivative instruments are recognized as
incurred through changes in working capital. The Company had deferred losses of
$16.5 million and deferred gains of $0.6 million on the balance sheet at
September 30, 1999, and September 30, 1998, respectively.

The Company uses a sensitivity analysis to evaluate the hypothetical effect that
changes in the market value of crude oil and natural gas may have on the fair
value of its derivative instruments. This analysis measures the impact on the
commodity derivative instruments and, thereby, does not consider the underlying
exposure related to the commodity. At September 30, 1999, the Company estimates
that a 10 percent change in the underlying commodities prices would result in a
$12.1 million change in the fair value of open derivative contracts; however,
gains and losses on derivative contracts are expected to be similarly offset by
sales at the spot market price. Due



                                       12
<PAGE>   13

to the short duration of the contracts, time value of money is ignored. The
hypothetical change in fair value is calculated by multiplying the difference
between the hypothetical price and the contractual price by the contractual
volumes and does not include the variance in basis difference or the impact of
related taxes on actual cash prices.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item for Energen Corporation and subsidiaries
is incorporated by reference from the 1999 Annual Report to Shareholders and is
included in Part IV, Item 14, Exhibit 13, herein. The information required by
this item for Alabama Gas Corporation is contained in Part IV, Item 14, herein.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None


























                                       13
<PAGE>   14


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

Information regarding the executive officers of Energen is included in Part I.
The other information required by Item 10 is incorporated herein by reference
from Energen's definitive proxy statement for the Annual Meeting of Shareholders
to be held January 26, 2000. The proxy statement will be filed on or about
December 22, 1999.

ITEM 11. EXECUTIVE COMPENSATION

The information regarding executive compensation is incorporated herein by
reference from Energen's definitive proxy statement for the Annual Meeting of
Shareholders to be held January 26, 2000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

A.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The information regarding the security ownership of the beneficial owners
     of more than five percent of Energen's common stock is incorporated herein
     by reference from Energen's definitive proxy statement for the Annual
     Meeting of Shareholders to be held January 26, 2000.

B.  SECURITY OWNERSHIP OF MANAGEMENT

     The information regarding the security ownership of management is
     incorporated herein by reference from Energen's definitive proxy statement
     for the Annual Meeting of Shareholders to be held January 26, 2000.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information regarding certain relationships and related transactions is
incorporated herein by reference from Energen's definitive proxy statement for
the Annual Meeting of Shareholders to be held January 26, 2000.





















                                       14
<PAGE>   15


PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

A.       DOCUMENTS FILED AS PART OF THIS REPORT

         (1)      FINANCIAL STATEMENTS
                  The financial statements listed in the accompanying Index to
                  Financial Statements and Financial Statement Schedules are
                  filed as part of this report and are included in Part IV, Item
                  14, Exhibit 13, herein.

         (2)      FINANCIAL STATEMENT SCHEDULES
                  The financial statement schedules listed in the accompanying
                  Index to Financial Statements and Financial Statement
                  Schedules are filed as part of this report.

         (3)      EXHIBITS
                  The exhibits listed on the accompanying Index to Exhibits are
                  filed as part of this report.

B.       REPORTS ON FORM 8-K

         (1)      Form 8-K dated October 15, 1998, reporting Energen Resources'
                  acquisition of TOTAL Minatome Corporation.

         (2)      Form 8-KA dated October 15, 1998, reporting supplementary
                  financial information related to Energen Resources'
                  acquisition of TOTAL Minatome Corporation.




















                                       15
<PAGE>   16


                                    SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrants have duly caused this report to be signed
on their behalf by the undersigned thereunto duly authorized.


                               ENERGEN CORPORATION
                                  (Registrant)


                             ALABAMA GAS CORPORATION
                                  (Registrant)



     December 17, 1999              /s/Wm. Michael Warren, Jr.
-------------------------           --------------------------------------------
         DATE                       Wm. Michael Warren, Jr.
                                    Chairman, President and Chief Executive
                                    Officer of Energen Corporation, Chairman and
                                    Chief Executive Officer of Alabama Gas
                                    Corporation



















                                       16
<PAGE>   17



                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrants and
in the capacities and on the dates indicated:



     December 17, 1999              /s/Wm. Michael Warren, Jr.
----------------------------        --------------------------------------------
         DATE                       Wm. Michael Warren, Jr.
                                    Chairman, President and Chief Executive
                                    Officer of Energen Corporation, Chairman and
                                    Chief Executive Officer of Alabama Gas
                                    Corporation


     December 17, 1999              /s/Geoffrey C. Ketcham
----------------------------        --------------------------------------------
         DATE                       Geoffrey C. Ketcham
                                    Executive Vice President, Chief Financial
                                    Officer and Treasurer of Energen Corporation
                                    and Alabama Gas Corporation


    December 17, 1999               /s/Grace B. Carr
----------------------------        --------------------------------------------
         DATE                       Grace B. Carr
                                    Controller of Energen Corporation


     December 17, 1999              /s/Paula H. Rushing
----------------------------        --------------------------------------------
         DATE                       Paula H. Rushing
                                    Vice President-Finance of Alabama Gas
                                    Corporation


    December 17, 1999               /s/J. Mason Davis, Jr.
----------------------------        --------------------------------------------
         DATE                       J. Mason Davis, Jr.
                                    Director


    December 17, 1999               /s/Julian W. Banton
----------------------------        --------------------------------------------
         DATE                       Julian W. Banton
                                    Director


     December 17, 1999              /s/James S. M. French
----------------------------        --------------------------------------------
         DATE                       James S. M. French
                                    Director


     December 17, 1999              /s/Rex J. Lysinger
----------------------------        --------------------------------------------
         DATE                       Rex J Lysinger
                                    Director




                                       17
<PAGE>   18






                               ENERGEN CORPORATION
                             ALABAMA GAS CORPORATION
                          INDEX TO FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES

                                   ITEM 14(A)

<TABLE>
<CAPTION>
                                                                             Reference Page
                                                                             --------------
                                                                                      1999
                                                                              1999   Annual
                                                                              10-K   Report
                                                                              ----   ------
<S>                                                                           <C>    <C>
1.   Financial Statements

     ENERGEN CORPORATION

            Report of Independent Certified Public Accountants ...............          57

            Consolidated Statements of Income for the years ended
            September 30, 1999, 1998 and 1997 ................................          33

            Consolidated Balance Sheets as of September 30, 1999 and 1998 ....          34

            Consolidated Statements of Shareholders' Equity for the years
            ended September 30, 1999, 1998 and 1997 ..........................          36

            Consolidated Statements of Cash Flows for the years ended
            September 30, 1999, 1998 and 1997 ................................          37

            Notes to Consolidated Financial Statements .......................          38

     ALABAMA GAS CORPORATION

            Report of Independent Certified Public Accountants ...............  22

            Statements of Income for the years ended
            September 30, 1999, 1998 and 1997 ................................  23

            Balance Sheets as of September 30, 1999 and 1998 .................  24

            Statements of Shareholder's Equity for the years ended
            September 30, 1999, 1998 and 1997 ................................  26

            Statements of Cash Flows for the years ended
            September 30, 1999, 1998 and 1997 ................................  27

            Notes to Financial Statements ....................................  28
</TABLE>







                                       18
<PAGE>   19



<TABLE>
<CAPTION>
                                                                               Reference Page
                                                                               --------------
                                                                                       1999
                                                                                 1999  Annual
                                                                                 10-K  Report
                                                                                 ----  ------
<S>  <C>                                                                       <C>     <C>
2.   Financial Statement Schedules

     ENERGEN CORPORATION

            Report of Independent Certified Public Accountants ...............    37

            Schedule II Valuation and Qualifying Accounts ....................    38

     ALABAMA GAS CORPORATION

            Schedule II Valuation and Qualifying Accounts ....................    39
</TABLE>


Schedules other than those listed above are omitted for the reason that they are
not required or are not applicable, or the required information is shown in the
financial statements or notes thereto.




















                                       19
<PAGE>   20


                               ENERGEN CORPORATION
                             ALABAMA GAS CORPORATION
                                INDEX TO EXHIBITS
                                  ITEM 14(A)(3)

<TABLE>
<CAPTION>
Exhibit
Number                     Description
------                     -----------
<S>      <C>
 *3(a)   Restated Certificate of Incorporation of Energen Corporation
         (composite, as amended February 2, 1998) which was filed as Exhibit
         3(a) to Energen's Annual Report on Form 10-K for the year ended
         September 30, 1998 (File No. 1-7810)

*3(b)    Articles of Amendment to Restated Certificate of Incorporation of
         Energen, designating Series 1998 Junior Participating Preferred Stock
         (July 27, 1998) which was filed as Exhibit 4(b) to Energen's Post
         Effective Amendment No. 1 to Registration Statement on Form S-3
         (Registration No. 333-00395)

 *3(c)   Bylaws of Energen Corporation (as amended through July 22, 1998) which
         was filed as Exhibit 3(c) to Energen's Annual Report on Form 10-K for
         the year ended September 30, 1998 (File No. 1-7810)

*3(d)    Articles of Amendment and Restatement of the Articles of Incorporation
         of Alabama Gas Corporation, dated September 27, 1995, which was filed
         as Exhibit 3(i) to the Registrant's Annual Report on Form 10-K for the
         year ended September 30, 1995, (file No. 1-7810)

 *3(e)   By-Laws of Alabama Gas Corporation (as amended through July 22, 1998)
         which was filed as Exhibit 3(e) to Energen's Annual Report on Form 10-K
         for the year ended September 30, 1998 (File No. 1-7810)

*4(a)    Rights Agreement, dated as of July 27, 1998, between Energen
         Corporation and First Chicago Trust Company of New York, Rights Agent,
         which was filed as Exhibit 1 to Energen's Registration Statement on
         Form 8-A, dated July 10, 1998 (File No. 1-7810)

*4(b)    Indenture, dated as of January 1, 1992, between Energen Corporation and
         Boatmen's Trust Company, Trustee, which was filed as Exhibit 4 to
         Energen's Amendment No. 1 to Registration Statement on Form S-3
         (Registration No. 33-44936)

*4(c)    First Supplemental Indenture, dated as of September 5, 1997, between
         Energen Corporation and The Bank of New York, Trustee, to Indenture
         dated as of January 1, 1992, which was filed as Exhibit 4(a) to the
         Registrant's Quarterly Report on Form 10-Q for the quarter ended
         December 31, 1997 (File No. 1-7810)

*4(d)    Indenture, dated as of March 1, 1993, between Energen Corporation and
         Boatmen's Trust Company, Trustee, which was filed as Exhibit 4 to
         Energen's Registration Statement on Form S-3 (Registration No.
         33-25435)

*4(e)    First Supplemental Indenture, dated as of September 5, 1997, between
         Energen Corporation and The Bank of New York, Trustee, to Indenture
         dated as of March 1, 1993, which was filed as Exhibit 4(b) to the
         Registrant's Quarterly Report on Form 10-Q for the quarter ended
         December 31, 1997 (File No. 1-7810)


</TABLE>



                                       20
<PAGE>   21


<TABLE>
<S>      <C>
*4(f)    Form of Indenture between Energen Corporation and The Bank of New York,
         as Trustee, which was dated as of September 1, 1996, and which was
         filed as Exhibit 4(i) to the Registrant's Registration Statement on
         Form S-3 (Registration No. 333-11239)

*4(g)    Indenture dated as of November 1, 1993, between Alabama Gas Corporation
         and NationsBank of Georgia, National Association, Trustee, which was
         filed as Exhibit 4(k) to Alabama Gas' Registration Statement on Form
         S-3 (Registration No. 33-70466)

*10(a)   Form of Service Agreement Under Rate Schedule CSS (No. S10710), between
         Southern Natural Gas Company and Alabama Gas Corporation which was
         filed as Exhibit 10(a) to Energen's Annual Report on Form 10-K for the
         year ended September 30, 1993 (File No. 1-7810)

*10(b)   Form of Service Agreement Under Rate Schedule FT-NN (No. 866941),
         between Southern Natural Gas Company and Alabama Gas Corporation which
         was filed as Exhibit 10(c) to Energen's Annual Report on Form 10-K for
         the year ended September 30, 1993 (File No. 1-7810)

10(c)    Form of Executive Retirement Supplement Agreement between Energen
         Corporation and it's executive officers

10(d)    Form of Severance Compensation Agreement between Energen Corporation
         and it's executive officers

*10(e)   Energen Corporation 1988 Stock Option Plan (as amended November 25,
         1997) which was filed as Exhibit 10(e) to Energen's Annual Report on
         Form 10-K for the year ended September 30, 1998 (File No. 1-7810)

10(f)    Energen Corporation 1992 Long-Range Performance Share Plan (as amended
         effective October 1, 1999).

10(g)    Energen Corporation 1997 Stock Incentive Plan (as amended effective
         October 1, 1999)

10(h)    Energen Corporation 1997 Deferred Compensation Plan (as amended
         effective October 1, 1999)

*10(i)   Energen Corporation 1992 Directors Stock Plan (as amended April 25,
         1997) which was filed as Exhibit 10(i) to Energen's Annual Report on
         Form 10-K for the year ended September 30, 1998 (File No. 1-7810)

*10(k)   Energen Corporation Annual Incentive Compensation Plan, Revised 5/90,
         as amended effective October 1, 1993, which was filed as Exhibit 10(m)
         to Energen's Annual Report on Form 10-K for the year ended September
         30, 1994 (File No. 1-7810)

13       Energen Corporation 1999 Annual Report to Shareholders (pages 25-61)

21       Subsidiaries of Energen Corporation

23       Consent of Independent Certified Public Accountants (Energen
         Corporation)

27.1     Financial Data Schedule of Energen Corporation (for SEC purposes only)

27.2     Financial Data Schedule of Alabama Gas Corporation (for SEC purposes
         only)
</TABLE>

*Incorporated by reference





                                       21
<PAGE>   22

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

TO THE BOARD OF DIRECTORS OF ALABAMA GAS CORPORATION:

In our opinion, the accompanying financial statements of Alabama Gas Corporation
listed in the index on page 18 of this Form 10-K present fairly, in all material
respects, the financial position of Alabama Gas Corporation at September 30,
1999 and 1998, and the results of its operations and cash flows for each of the
three years in the period ended September 30, 1999, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule listed in the index on page 19 of this Form 10-K presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related financial statements. These financial statements
and the financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.




PricewaterhouseCoopers LLP
Birmingham, Alabama
October 27, 1999

















                                       22
<PAGE>   23



STATEMENTS OF INCOME
ALABAMA GAS CORPORATION



<TABLE>
<CAPTION>
=====================================================================================

YEARS ENDED SEPTEMBER 30, (IN THOUSANDS)           1999          1998         1997
=====================================================================================

<S>                                             <C>           <C>           <C>
OPERATING REVENUES                              $ 325,554     $ 369,940     $ 362,984
-------------------------------------------------------------------------------------

OPERATING EXPENSES
Cost of gas                                       126,264       176,124       177,837
Operations and maintenance                        100,478        98,897        96,211
Depreciation                                       26,730        25,153        23,486
Income taxes
    Current                                        15,748        16,801        11,223
    Deferred, net                                  (2,137)       (4,932)         (618)
    Deferred investment tax credits, net             (448)         (469)         (487)
Taxes, other than income taxes                     25,517        28,103        26,658
-------------------------------------------------------------------------------------


       Total operating expenses                   292,152       339,677       334,310
-------------------------------------------------------------------------------------


OPERATING INCOME                                   33,402        30,263        28,674
-------------------------------------------------------------------------------------


OTHER INCOME (EXPENSE)
Allowance for funds used during construction          374           400           490
Other, net                                           (113)          145           215
-------------------------------------------------------------------------------------


       Total other income                             261           545           705
-------------------------------------------------------------------------------------


INTEREST CHARGES
Interest on long-term debt                          8,614         8,843         8,843
Other interest expense                              1,752         1,378         1,966
-------------------------------------------------------------------------------------


       Total interest charges                      10,366        10,221        10,809
-------------------------------------------------------------------------------------


NET INCOME                                      $  23,297     $  20,587     $  18,570
=====================================================================================
</TABLE>









The accompanying Notes to Financial Statements are an integral part of these
statements.




                                       23
<PAGE>   24


BALANCE SHEETS
ALABAMA GAS CORPORATION

<TABLE>
<CAPTION>
================================================================================

AS OF SEPTEMBER 30, (IN THOUSANDS)               1999                1998
================================================================================
<S>                                           <C>                 <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT
Utility plant                                 $ 645,596           $ 632,165
Less accumulated depreciation                   328,775             307,488
--------------------------------------------------------------------------------

    Utility plant, net                          316,821             324,677
--------------------------------------------------------------------------------


Other property, net                                 298                 318
--------------------------------------------------------------------------------


CURRENT ASSETS
Cash                                                533               1,222
Accounts receivable
    Gas                                          37,157              32,191
    Merchandise                                   2,283               2,362
    Other                                         1,966               1,621
    Affiliated companies                         20,654                  --
    Allowance for doubtful accounts              (4,532)             (3,482)
Inventories, at average cost
    Storage gas inventory                        24,722              21,237
    Materials and supplies                        5,024               5,533
    Liquified natural gas in storage              3,318               3,381
Deferred gas costs                                2,305               1,774
Deferred income taxes                            11,621              10,470
Prepayments and other                             4,652               2,112
--------------------------------------------------------------------------------


       Total current assets                     109,703              78,421
--------------------------------------------------------------------------------


DEFERRED CHARGES AND OTHER ASSETS                 3,833               4,733
--------------------------------------------------------------------------------


TOTAL ASSETS                                  $ 430,655           $ 408,149
================================================================================
</TABLE>









The accompanying Notes to Financial Statements are an integral part of these
statements.



                                       24
<PAGE>   25










BALANCE SHEETS
ALABAMA GAS CORPORATION

<TABLE>
<CAPTION>
================================================================================

AS OF SEPTEMBER 30, (IN THOUSANDS)                         1999          1998
================================================================================

<S>                                                      <C>           <C>
CAPITAL AND LIABILITIES
CAPITALIZATION
Common shareholder's equity
    Common stock, $0.01 par value; 3,000,000 shares
       authorized, 1,972,052 shares outstanding at
       September 30, 1999 and 1998, respectively         $     20      $     20
    Premium on capital stock                               31,682        31,682
    Capital surplus                                         2,802         2,802
    Retained earnings                                     143,502       120,205
--------------------------------------------------------------------------------


    Total common shareholder's equity                     178,006       154,709
Long-term debt                                            119,650       119,650
--------------------------------------------------------------------------------


       Total capitalization                               297,656       274,359
--------------------------------------------------------------------------------


CURRENT LIABILITIES
Long-term debt due within one year                             --         5,350
Notes payable to banks                                         --        15,000
Accounts payable
    Trade                                                  36,985        23,217
    Affiliated companies                                       --         2,738
Accrued taxes                                              18,799        19,428
Customers' deposits                                        16,301        16,344
Amounts due customers                                      18,576        12,070
Accrued wages and benefits                                  9,663         4,217
Other                                                      10,847        11,915
--------------------------------------------------------------------------------


       Total current liabilities                          111,171       110,279
--------------------------------------------------------------------------------


DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes                                      16,689        17,136
Accumulated deferred investment tax credits                 2,213         2,661
Regulatory liability                                        2,112         2,910
Customer advances for construction and other                  814           804
--------------------------------------------------------------------------------


       Total deferred credits and other liabilities        21,828        23,511
--------------------------------------------------------------------------------

TOTAL CAPITAL AND LIABILITIES                            $430,655      $408,149
================================================================================
</TABLE>









The accompanying Notes to Financial Statements are an integral part of these
statements.




                                       25
<PAGE>   26


STATEMENTS OF SHAREHOLDER'S EQUITY
ALABAMA GAS CORPORATION

<TABLE>
<CAPTION>
=================================================================================================

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
=================================================================================================
                                    COMMON STOCK
                                  ------------------
                                  NUMBER OF     PAR         PREMIUM ON       CAPITAL     RETAINED
                                   SHARES      VALUE       CAPITAL STOCK     SURPLUS     EARNINGS
-------------------------------------------------------------------------------------------------
<S>                              <C>           <C>         <C>            <C>            <C>
BALANCE AT SEPTEMBER 30, 1996      1,972,052   $  20        $ 31,682      $   2,802      $ 95,044
Net income                                                                                 18,570
Cash dividends                                                                             (6,720)
-------------------------------------------------------------------------------------------------


BALANCE AT SEPTEMBER 30, 1997      1,972,052      20          31,682          2,802       106,894
Net income                                                                                 20,587
Cash dividends                                                                             (7,276)
-------------------------------------------------------------------------------------------------


BALANCE AT SEPTEMBER 30, 1998      1,972,052      20          31,682          2,802       120,205
Net income                                                                                 23,297
-------------------------------------------------------------------------------------------------


BALANCE AT SEPTEMBER 30, 1999      1,972,052   $  20       $  31,682      $   2,802     $ 143,502
=================================================================================================
</TABLE>








The accompanying Notes to Financial Statements are an integral part of these
statements.









                                       26
<PAGE>   27


STATEMENTS OF CASH FLOWS
ALABAMA GAS CORPORATION


<TABLE>
<CAPTION>
======================================================================================================

YEARS ENDED SEPTEMBER 30, (IN THOUSANDS)                          1999           1998           1997
======================================================================================================
<S>                                                             <C>            <C>            <C>
OPERATING ACTIVITIES
Net income                                                      $ 23,297       $ 20,587       $ 18,570
Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
    Depreciation and amortization                                 26,730         25,153         23,486
    Deferred income taxes, net                                    (2,137)        (4,932)          (618)
    Deferred investment tax credits                                 (448)          (469)          (487)
    Net change in:
       Accounts receivable                                        (4,182)         3,693         (7,686)
       Inventories                                                (2,913)         4,237          2,071
       Deferred gas costs                                           (531)           738           (537)
       Accounts payable - gas purchases                           14,115         (7,466)         5,758
       Accounts payable - trade                                     (347)         1,760           (593)
       Amounts due customers                                       6,695          4,723         (9,810)
       Other current assets and liabilities                        1,198          9,129         (5,202)
    Other, net                                                      (583)           530          1,124
------------------------------------------------------------------------------------------------------


       Net cash provided by operating activities                  60,894         57,683         26,076
------------------------------------------------------------------------------------------------------


INVESTING ACTIVITIES
Additions to property, plant and equipment                       (45,390)       (53,581)       (43,724)
Net advances (to) from parent company                            (23,392)        (2,246)        14,054
Proceeds from sale of assets                                      27,000             --             --
Other, net                                                           549             62          1,091
------------------------------------------------------------------------------------------------------


       Net cash used in investing activities                     (41,233)       (55,765)       (28,579)
------------------------------------------------------------------------------------------------------


FINANCING ACTIVITIES
Payment of dividends on common stock                                  --         (7,276)        (6,720)
Reduction of long-term debt                                       (5,350)            --             --
Net change in short-term debt                                    (15,000)         4,000         11,000
------------------------------------------------------------------------------------------------------


       Net cash provided by (used in) financing activities       (20,350)        (3,276)         4,280
------------------------------------------------------------------------------------------------------


Net change in cash and cash equivalents                             (689)        (1,358)         1,777
Cash and cash equivalents at beginning of period                   1,222          2,580            803
------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                      $    533       $  1,222       $  2,580
======================================================================================================
</TABLE>









The accompanying Notes to Financial Statements are an integral part of these
statements.




                                       27
<PAGE>   28


NOTES TO FINANCIAL STATEMENTS

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
================================================================================

Alabama Gas Corporation (Alagasco), a wholly-owned subsidiary of Energen
Corporation (the Company), is the largest natural gas distribution utility in
the State of Alabama, serving customers primarily in central and parts of north
Alabama. The following is a description of its significant accounting policies
and practices.

A.       UTILITY PLANT AND DEPRECIATION: Property, plant and equipment is stated
         at cost. The cost of utility plant includes an allowance for funds used
         during construction. Maintenance is charged for the cost of normal
         repairs and the renewal or replacement of an item of property which is
         less than a retirement unit. When property which represents a
         retirement unit is replaced or removed, the cost of such property is
         credited to utility plant and, together with the cost of removal less
         salvage, is charged to the accumulated reserve for depreciation.
         Depreciation is provided on the straight-line method over the estimated
         useful lives of utility property at rates established by the Alabama
         Public Service Commission (APSC). Approved depreciation rates averaged
         approximately 4.5 percent in 1999 and 4.4 percent in 1998 and 1997.

B.       INVENTORIES: Inventories, which consist primarily of gas stored
         underground, are stated at average cost.

C.       OPERATING REVENUE AND GAS COSTS: In accordance with industry practice,
         Alagasco records natural gas distribution revenues on a monthly- and
         cycle-billing basis. The commodity cost of purchased gas applicable to
         gas delivered to customers but not yet billed under the cycle-billing
         method is deferred as a current asset.

D.       REGULATORY ACCOUNTING: Alagasco is subject to the provisions of
         Statement of Financial Accounting Standard (SFAS) No. 71, Accounting
         for the Effects of Certain Types of Regulation. In general, SFAS No. 71
         allows utilities to capitalize or defer certain costs or revenues,
         based upon approvals received from regulatory authorities, to be
         recovered from or refunded to customers in future periods.

E.       INCOME TAXES: Alagasco files a consolidated federal income tax return
         with its parent. Consolidated federal income taxes are allocated to the
         appropriate subsidiaries using the separate return method. Alagasco
         uses the liability method of accounting for income taxes in accordance
         with SFAS No. 109, Accounting for Income Taxes. Under this method, a
         deferred tax liability or asset is recognized for the estimated future
         tax effects attributable to temporary differences. Deferred tax assets
         and liabilities are measured using enacted tax rates expected to apply
         to taxable income in the years to which those temporary differences are
         expected to be recovered or settled. Investment tax credits have been
         deferred and are being amortized over the lives of the related assets.

F.       CASH EQUIVALENTS: Alagasco includes highly liquid marketable
         securities and debt instruments purchased with a maturity of three
         months or less in cash equivalents.

G.       ESTIMATES: The preparation of financial statements in conformity with
         generally accepted accounting principles requires management to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities at the date of the financial statements and the
         reported amount of revenues and expenses during the reporting period.
         Actual results could differ from those estimates.

2.       REGULATORY MATTERS
================================================================================

As an Alabama utility, Alagasco is subject to regulation by the APSC which, in
1983, established the Rate Stabilization and Equalization (RSE) rate-setting
process. RSE was extended with modifications in 1985, 1987 and 1990. On October
7, 1996, RSE was extended, without change, for a five-year period through
January 1, 2002. Under the terms of that extension, RSE will continue after
January 1, 2002, unless, after notice to the Company and a hearing, the
Commission votes to either modify or discontinue its operation. Under RSE as
extended, the APSC conducts quarterly reviews to determine, based on Alagasco's
projections and fiscal year-to-date performance, whether Alagasco's return on
equity for the fiscal year will be within the allowed range of 13.15



                                       28
<PAGE>   29

percent to 13.65 percent. Reductions in rates can be made quarterly to bring the
projected return within the allowed range; increases, however, are allowed only
once each fiscal year, effective December 1, and cannot exceed 4 percent of
prior-year revenues. RSE limits the utility's equity upon which a return is
permitted to 60 percent of total capitalization and provides for certain cost
control measures designed to monitor Alagasco's operations and maintenance (O&M)
expense. If the change in O&M expense per customer falls within 1.25 percentage
points above or below the Consumer Price Index For All Urban Customers (index
range), no adjustment is required. If the change in O&M expense per customer
exceeds the index range, three-quarters of the difference is returned to
customers. To the extent the change is less than the index range, the utility
benefits by one-half of the difference through future rate adjustments. In
fiscal 1999, the increase in O&M expense per customer was below the index range;
as a result the utility benefited by $0.7 million. Under RSE as extended, a $4.5
million and a $6.6 million annual increase in revenue became effective December
1, 1999 and 1998, respectively. An $11.8 million annual increase in revenue
became effective December 1, 1997, with a $2.5 million annual decrease in
revenue effective July 1, 1998.

Alagasco calculates a temperature adjustment to customers' monthly bills to
remove the effect of departures from normal temperature on Alagasco's earnings.
The calculation is performed monthly, and the adjustments to customers' bills
are made in the same billing cycle the weather variation occurs. Substantially
all the customers to whom the temperature adjustment applies are residential,
small commercial and small industrial. Alagasco's rate schedules for natural gas
distribution charges contain a Gas Supply Adjustment (GSA) rider, established in
1993, which permits the pass-through to customers of changes in the cost of gas
supply, including Gas Supply Realignment (GSR) surcharges imposed by Alagasco's
suppliers resulting from changes in gas supply purchases related to the
implementation of Federal Energy Regulatory Commission (FERC) Order 636. The
APSC on October 7, 1996, issued an order providing for the refund to customers
prior to January 31, 1997 of approximately $17 million of supplier refunds,
including interest. The Company refunded these amounts to customers during
January 1997. The refunds were collected from a variety of sources and most
relate to the settlement of rate case and FERC Order 636 proceedings of Southern
Natural Gas Company.

The APSC approved an Enhanced Stability Reserve (ESR), beginning fiscal year
1998, to which Alagasco may charge the full amount of: (1) extraordinary O&M
expenses resulting from force majeure events such as storms, severe weather, and
outages, when one or a combination of two such events results in more than
$200,000 of additional O&M expense during a fiscal year; and (2) individual
industrial and commercial customer revenue losses that exceed $250,000 during
the fiscal year if such losses cause Alagasco's return on equity to fall below
13.15 percent. The APSC approved the reserve on October 6, 1998, in the amount
of $3.9 million; the maximum approved funding level of the ESR is $4 million.
Following a year in which a charge against the ESR is made, the APSC provides
for accretions to the ESR of no more than $40,000 monthly until the maximum
funding level is achieved. The APSC will re-evaluate the operation of the ESR
following the conclusion of Alagasco's fiscal year 2000.

In accordance with APSC-directed regulatory accounting procedures, Alagasco in
1989 began returning to customers excess utility deferred taxes which resulted
from a reduction in the federal statutory tax rate from 46 percent to 34 percent
using the average rate assumption method. This method provides for the return to
ratepayers of excess deferred taxes over the lives of the related assets. In
1993 those excess taxes were reduced as a result of a federal tax rate increase
from 34 percent to 35 percent. Remaining excess utility deferred taxes of $1.7
million are being returned to ratepayers over approximately 11 years. At
September 30, 1999 and 1998, a regulatory liability related to income taxes of
$2.1 million and $2.9 million, respectively, was included in the consolidated
financial statements.

As of November 1, 1998, the Company offered a Voluntary Early Retirement Program
to certain eligible employees. The APSC has allowed these costs to be amortized
over a three-year period. At September 30, 1999, a regulatory asset of $2.4
million for costs associated with the early retirement program is included in
the financial statements.



                                       29
<PAGE>   30

The excess of total acquisition costs over book value of net assets of acquired
municipal gas distribution systems is included in utility plant and is being
amortized on a straight-line basis over approximately 23 years. At September 30,
1999 and 1998, the net acquisition adjustment was $14.4 million and $15.4
million, respectively.

3.       LONG-TERM DEBT AND NOTES PAYABLE

<TABLE>
<CAPTION>
=====================================================================================

Long-term debt of Alagasco consists of the following:
-------------------------------------------------------------------------------------

As of September 30, (in thousands)                                  1999       1998
-------------------------------------------------------------------------------------
<S>                                                               <C>        <C>

Medium-term Notes, interest ranging from 5.85% to 7.97%,
   for notes redeemable December 16, 2000, to September 23, 2026  $119,650   $125,000
Less amounts due within one year                                         -      5,350
-------------------------------------------------------------------------------------
  Total                                                           $119,650   $119,650
=====================================================================================
</TABLE>

The aggregate maturities of Alagasco long-term debt for the next five years are
as follows:

<TABLE>
<CAPTION>
=====================================================================================
                    Years ending September 30, (in thousands)
=====================================================================================
    <S>            <C>           <C>            <C>                 <C>
     2000            2001          2002           2003                2004
-------------------------------------------------------------------------------------
    $   -          $ 4,650       $ 5,000        $ 5,000             $ 10,000
=====================================================================================
</TABLE>


Energen has short-term credit lines and other credit facilities of $249 million
available as of September 30, 1999 to either entity for working capital needs.
The following is a summary of information relating to notes payable to banks:


<TABLE>
<CAPTION>
=====================================================================================
As of September 30, (in thousands)                        1999       1998      1997
=====================================================================================
<S>                                                     <C>        <C>       <C>
Alagasco outstanding                                    $     --   $ 15,000  $ 11,000
Other Energen outstanding                                238,000    138,000   141,000
-------------------------------------------------------------------------------------
Notes payable to banks                                   238,000    153,000   152,000
Available for borrowings                                  11,000     75,000    51,000
-------------------------------------------------------------------------------------
  Total                                                 $249,000   $228,000  $203,000
-------------------------------------------------------------------------------------
Alagasco maximum amount outstanding at any month-end    $ 35,000   $ 36,000  $ 41,000
Alagasco average daily amount outstanding               $  9,140   $ 13,225  $  9,962
Alagasco weighted average interest rates based on:
  Average daily amount outstanding                          5.48%      5.94%     5.83%
  Amount outstanding at year-end                              --       5.75%     5.99%
=====================================================================================
</TABLE>


Total interest expense for Alagasco in 1999, 1998 and 1997 was $10,366,000,
$10,221,000 and $10,809,000, respectively.

4. INCOME TAXES
================================================================================

The components of income taxes consist of the following:

<TABLE>
<CAPTION>
=====================================================================================
For the years ended September 30, (in thousands)    1999       1998        1997
=====================================================================================
<S>                                               <C>        <C>         <C>
Taxes estimated to be payable currently:
    Federal                                       $ 14,331   $ 15,306    $ 10,219
    State                                            1,417      1,495       1,004
-------------------------------------------------------------------------------------
      Total current                                 15,748     16,801      11,223
-------------------------------------------------------------------------------------
Taxes deferred:
    Federal                                         (2,395)    (4,962)     (1,050)
    State                                             (190)      (439)        (55)
-------------------------------------------------------------------------------------
      Total deferred                                (2,585)    (5,401)     (1,105)
-------------------------------------------------------------------------------------
Total income tax expense                          $ 13,163   $ 11,400    $ 10,118
=====================================================================================
</TABLE>



                                       30
<PAGE>   31

Temporary differences and carryforwards which give rise to a significant portion
of deferred tax assets and liabilities for 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
================================================================================================================
As of September 30, (in thousands)                            1999                              1998
================================================================================================================
                                                    Current       Noncurrent           Current       Noncurrent
                                                    ------------------------           ------------------------
<S>                                               <C>            <C>                 <C>            <C>
Deferred tax assets:
    Deferred investment tax credits               $        -     $        683        $         -    $        850
    Regulatory liabilities                                 -              784                  -           1,081
    Enhanced stability reserve                         1,452                -              1,452               -
    Unbilled revenue                                   1,764                -              1,770               -
    Gas supply adjustment                                124                -                768               -
    Insurance and accruals                             3,146                -              3,320               -
    Inventories                                          816                -                574               -
    Allowance for uncollectible accounts               1,684                -              1,293               -
    Pension and other costs                            1,587                -                  -               -
    Other, net                                         1,574              118              2,071              61
-----------------------------------------------------------------------------------------------------------------
    Subtotal                                          12,147            1,585             11,248           1,992
    Valuation allowance                                    -                -                  -               -
-----------------------------------------------------------------------------------------------------------------
       Total deferred tax assets                      12,147            1,585             11,248           1,992
-----------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
    Depreciation and basis differences                     -           18,274                  -          18,170
    Pension and other costs                                -                -                485               -
    Other, net                                           526                -                293             958
-----------------------------------------------------------------------------------------------------------------
       Total deferred tax liabilities                    526           18,274                778          19,128
-----------------------------------------------------------------------------------------------------------------
Net deferred tax assets (liabilities)             $   11,621     $    (16,689)        $   10,470    $     (17,136)
==================================================================================================================
</TABLE>

No valuation allowance with respect to deferred taxes is deemed necessary, as
Alagasco anticipates generating adequate future taxable income to realize the
benefits of all deferred tax assets on Alagasco's balance sheet.

Total income tax expense differs from the amount which would be provided by
applying the statutory federal income tax rate to earnings before taxes as
illustrated below:


<TABLE>
<CAPTION>
==================================================================================================================
For the years ended September 30, (in thousands)                   1999               1998                1997
==================================================================================================================
<S>                                                              <C>                <C>                <C>
Income tax expense at statutory federal income tax rate          $ 12,761           $ 11,195           $ 10,042
Increase (decrease) resulting from:
  Deferred investment tax credits                                    (448)              (469)              (487)
  State income taxes, net of federal income tax benefit               784                688                617
  Other, net                                                           66                (14)               (54)
------------------------------------------------------------------------------------------------------------------
Total income tax expense                                         $ 13,163           $ 11,400           $ 10,118
==================================================================================================================
</TABLE>


There were no tax-related balances due to affiliates at September 30, 1999 or
1998. Alagasco has evaluated its tax position and believes the financial
statements properly reflect the income tax matters of the company.

5. EMPLOYEE BENEFIT PLANS
================================================================================


All information presented concerning retirement income and other benefit plans
includes other affiliates of Energen Corporation as well as Alagasco.

The Company has two defined benefit non-contributory pension plans: Plan A which
covers a majority of the employees and Plan B which covers employees under
certain labor union agreements. Benefits are based on years of service and final
earnings. The Company's policy is to use the projected unit credit actuarial
method for funding and financial reporting purposes.




                                       31
<PAGE>   32


The status of the plans was as follows:


<TABLE>
<CAPTION>
================================================================================================================
As of June 30, (in thousands)                                    PLAN A                          PLAN B
================================================================================================================
                                                         1999              1998          1999              1998
                                                         ----------------------          ---------------------
<S>                                                  <C>              <C>            <C>             <C>
Projected benefit obligation:
Balance at beginning of year                         $     88,281     $    73,758    $    18,898     $    16,866
Service cost                                                2,653           2,386            299             224
Interest cost                                               6,193           5,841          1,338           1,261
Plan amendments                                                 -           2,944            843               -
Actuarial loss (gain)                                      (8,205)          7,066         (1,803)          1,737
Special termination benefits                                1,487               -              -               -
Benefits paid                                             (16,568)         (3,714)        (1,348)         (1,190)
-----------------------------------------------------------------------------------------------------------------
Balance at end of year                                     73,841          88,281         18,227          18,898
-----------------------------------------------------------------------------------------------------------------
Plan assets:
Fair value of plan assets at beginning of year             90,661          84,859         23,081          20,820
Actual return on plan assets                               18,482           9,516          2,310           3,451
Benefits paid                                             (16,568)         (3,714)        (1,348)         (1,190)
-----------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year                   92,575          90,661         24,043          23,081
-----------------------------------------------------------------------------------------------------------------
Amounts recognized in the Consolidated Balance Sheets:
Funded status of plan                                      18,734           2,380          5,816           4,183
Unrecognized actuarial loss (gain)                        (23,897)         (2,773)        (5,621)         (2,944)
Unrecognized prior service cost                             2,790           3,025          1,398             791
Unrecognized net transition obligation (asset)             (1,877)         (2,686)           170             226
-----------------------------------------------------------------------------------------------------------------
Accrued pension asset (liability)                    $     (4,250)    $       (54)   $     1,763     $     2,256
=================================================================================================================
</TABLE>

The components of net pension expense were:


<TABLE>
<CAPTION>
=================================================================================================================
For the years ended September 30, (in thousands)                 PLAN A                         PLAN B
=================================================================================================================
                                                         1999      1998      1997       1999      1998     1997
                                                         ------------------------       -----------------------
<S>                                                  <C>        <C>       <C>        <C>        <C>      <C>
Components of net periodic benefit cost:
Service cost                                         $   2,653  $  2,386  $  2,227   $    299   $   224  $   243
Interest cost                                            6,192     5,842     5,524      1,338     1,261    1,238
Expected return on assets                               (5,937)   (5,709)   (5,766)    (1,510)   (1,346)  (1,308)
Prior service cost amortization                            235         5         5        235       207      207
Actuarial loss (gain)                                        -         -        46          -         -        -
Transition amortization                                   (808)     (808)     (808)        57        57        57
-----------------------------------------------------------------------------------------------------------------
Net periodic expense                                 $   2,335  $  1,716  $  1,228   $    419   $   403   $   437
=================================================================================================================
</TABLE>



<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
As of September 30,                                                 PLAN A                         PLAN B
-----------------------------------------------------------------------------------------------------------------
                                                             1999           1998            1999            1998
                                                             -------------------            --------------------
<S>                                                          <C>            <C>             <C>             <C>
Weighted average weight assumptions
 in pension actuarial calculations:
Discount rate                                                7.75%          7.00%           7.75%           7.00%
Expected return on plan assets                               8.25%          8.25%           8.25%           8.25%
Rate of compensation  increase                               5.25%          4.50%              -               -
=================================================================================================================
</TABLE>



                                       32
<PAGE>   33



The Company has deferred compensation plan agreements with certain key
executives providing for payments on retirement, termination, death or
disability. Expense under these agreements for 1999, 1998 and 1997 was
$(75,000), $(54,000), and $399,000, respectively. At June 30, 1999 and 1998, the
accumulated post-retirement benefit obligation related to these agreements was
$2,620,000 and $2,901,000, respectively, and the projected benefit obligation
was $7,189,000 and $7,088,000, respectively. A prepaid post-retirement benefit
asset of $844,000 and $434,000 was recorded at June 30, 1999 and 1998,
respectively.

In addition to providing pension benefits, the Company provides certain
post-retirement health care and life insurance benefits. Substantially all of
the Company's employees may become eligible for such benefits if they reach
normal retirement age while working for the Company. The projected unit credit
actuarial method was used to determine the normal cost and actuarial liability.

The status of the post-retirement benefit programs was as follows:


<TABLE>
<CAPTION>
==================================================================================================================
As of June 30, (in thousands)                               SALARIED EMPLOYEES                UNION EMPLOYEES
==================================================================================================================

                                                           1999            1998             1999              1998
                                                           --------------------             ----------------------
<S>                                                   <C>             <C>              <C>             <C>
Projected post-retirement benefit obligation:
Balance at beginning of year                          $    29,312     $   20,020       $    37,751     $    33,020
Service cost                                                1,464            967             2,039           1,314
Interest cost                                               2,013          2,049             2,599           2,612
Actuarial loss (gain)                                      (2,530)         7,286            (3,709)          2,165
Special termination benefits                                  338              -                 -               -
Benefits paid                                              (1,453)        (1,010)           (1,257)         (1,360)
-------------------------------------------------------------------------------------------------------------------
Balance at end of year                                     29,144         29,312            37,423          37,751
-------------------------------------------------------------------------------------------------------------------
Plan assets:
Fair value of plan assets at beginning of year             30,476         23,719            23,081          13,363
Actuarial return on plan assets                             4,896          6,161             2,468           6,628
Company contribution                                        1,575          1,606             2,410           4,450
Benefits paid                                              (1,453)        (1,010)           (1,257)         (1,360)
-------------------------------------------------------------------------------------------------------------------
Balance at end of year                                     35,494         30,476            26,702          23,081
-------------------------------------------------------------------------------------------------------------------
Amounts recognized in the Consolidated Balance Sheets:
Funded status of plan                                       6,350          1,164           (10,721)        (14,670)
Unrecognized actuarial loss (gain)                        (16,468)       (12,402)           (7,266)         (5,714)
Unrecognized net transition obligation                     10,118         10,841            17,987          19,272
-------------------------------------------------------------------------------------------------------------------
Accrued post-retirement benefit liability             $         -     $     (397)      $         -     $    (1,112)
==================================================================================================================
</TABLE>


Net periodic post-retirement benefit expense included the following:


<TABLE>
<CAPTION>
==================================================================================================================
For the years ended September 30, (in thousands)           SALARIED EMPLOYEES               UNION EMPLOYEES
==================================================================================================================
                                                         1999      1998     1997        1999      1998      1997
                                                       -------------------------      --------------------------
<S>                                                  <C>        <C>       <C>        <C>        <C>       <C>
Components of net periodic benefit cost:
Service cost                                         $   1,464  $    967  $    979   $  2,039   $  1,314  $ 1,198
Interest cost                                            2,013     2,049     2,204      2,599      2,612    2,542
Expected return on assets                               (1,448)   (1,189)   (1,117)    (1,156)      (737)    (821)
Actuarial loss (gain)                                     (590)     (510)     (568)      (129)      (107)       -
Transition amortization                                    723       723       723      1,285      1,285    1,285
-----------------------------------------------------------------------------------------------------------------
Net periodic post-retirement benefit expense         $   2,162  $  2,040  $  2,221   $  4,638   $  4,367  $ 4,204
=================================================================================================================
</TABLE>




                                       33
<PAGE>   34



<TABLE>
<CAPTION>
================================================================================
As of September 30,                         PLAN A              PLAN B
================================================================================
                                        1999      1998      1999     1998
                                        --------------      -------------
<S>                                     <C>       <C>       <C>      <C>
Weighted average weight assumptions
 in pension actuarial calculations:
Discount rate                           7.75%     7.00%     7.75%    7.00%
Expected return on plan assets          8.25%     8.25%     8.25%    8.25%

Rate of compensation increase           5.25%     4.50%        -        -
Health care cost trend rate             7.50%     7.50%     7.50%    7.50%
</TABLE>
================================================================================

The weighted average health care cost trend rate used in determining the
accumulated post-retirement benefit has a significant effect on the amounts
reported. For example, with respect to salaried employees, increasing the
weighted average health care cost trend rate by 1 percentage point would
increase the accumulated post-retirement benefit obligation by 2.8 percent and
the net periodic post-retirement benefit cost by 2.3 percent. For union
employees, increasing the weighted average health care cost trend rate by 1
percentage point would increase the accumulated post-retirement benefit
obligation by 7.2 percent and the net periodic post-retirement benefit cost by 7
percent.

For both defined benefit plans and other post-retirement plans, certain
financial assumptions are used in determining the Company's projected benefit
obligation. These assumptions are examined periodically by the Company, and any
required changes are reflected in the subsequent determination of projected
benefit obligations.

The Company has a long-term disability plan covering most salaried employees.
Expense for the years ended September 30, 1999, 1998, and 1997 was $177,000,
$173,000, and $163,000, respectively.

6. CAPITAL STOCK
================================================================================

Alagasco's authorized common stock consists of 3 million, $0.01 par value common
shares. At September 30, 1999 and 1998, 1,972,052 shares were issued and
outstanding. Alagasco is authorized to issue 120,000 shares of preferred stock
par value $0.01 per share, in one or more series. There are no preferred shares
currently outstanding.

7. COMMITMENTS AND CONTINGENCIES
================================================================================

CONTRACTS AND AGREEMENTS: Alagasco has various firm gas supply and firm gas
transportation contracts which expire at various dates through the year 2008.
These contracts typically contain minimum demand charge obligations on the part
of Alagasco.

ENVIRONMENTAL MATTERS: Alagasco is in the chain of title of eight former
manufactured gas plant sites, of which it still owns four, and five manufactured
gas distribution sites, of which it still owns one. A preliminary investigation
of the sites does not indicate the present need for remediation activities.
Management expects that, should remediation of any such sites be required in the
future, Alagasco's share, if any, of such costs will not affect materially the
results of operations or financial condition of Alagasco.

LEGAL MATTERS: Alagasco is, from time to time, party to various pending or
threatened legal proceedings. Certain of these lawsuits include claims for
punitive damages in addition to other specified relief. Based upon information
presently available, and in light of available legal and other defenses,
contingent liabilities arising from threatened and pending litigation are not
considered material in relation to the financial position of Alagasco. It should
be noted, however, that Alagasco conducts business in Alabama and other
jurisdictions in which the magnitude and frequency of punitive damage awards
bear little or no relation to culpability or actual damages thus making it
increasingly difficult to predict litigation results. Various legal proceedings
arising in the normal course of business are currently in progress, and Alagasco
has accrued a provision for estimated costs.



                                       34
<PAGE>   35

LEASE OBLIGATIONS: In January 1999, Alagasco closed on a sale-leaseback of the
Company's new headquarters building. The proceeds from the sale approximated the
investment in the facility. The building is being leased from the purchaser over
a 25 year lease term and the related lease is accounted for as an operating
lease. Total payments related to leases included as operating expense, inclusive
of the sale-leaseback, were $2,079,000, $2,292,000 and $2,280,000 in 1999, 1998
and 1997, respectively. Minimum future rental payments required after 1999 under
leases with initial or remaining noncancelable lease terms in excess of one year
are as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                    Years ending September 30, (in thousands)
--------------------------------------------------------------------------------
   2000        2001       2002         2003      2004       2005 AND THEREAFTER
--------------------------------------------------------------------------------
<S>          <C>         <C>          <C>       <C>               <C>
  $2,074     $2,014      $1,963       $1,919    $1,781            $  36,722
================================================================================
</TABLE>

8. SUPPLEMENTAL CASH FLOW INFORMATION
================================================================================

Supplemental information concerning cash flow activities is as follows:


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
For the years ended September 30, (in thousands)    1999       1998       1997
================================================================================
<S>                                                <C>        <C>        <C>
Interest paid, net of amount capitalized           $10,539    $11,256    $10,192
Income taxes paid                                  $16,342    $16,253    $13,228
Noncash investing activities:
  Capitalized depreciation                         $   265    $   187    $   168
  Allowance for funds used during construction     $   374    $   400    $   490
--------------------------------------------------------------------------------
</TABLE>

9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
================================================================================

FINANCIAL INSTRUMENTS: The fair value of cash and cash equivalents, trade
receivables (net of allowance), and short-term debt approximates fair value due
to the short maturity of the instruments. The fair value of fixed-rate long-term
debt, including the current portion, with a carrying value of $119,650,000,
would be $120,755,000 at September 30, 1999. The fair value was based on the
market value of debt with similar maturities and with interest rates currently
trading in the marketplace.

Alagasco has entered into an agreement with a financial institution whereby it
can sell on an ongoing basis, with recourse, certain installment receivables
related to its merchandising program up to a maximum of $20 million. During
1999, 1998 and 1997, Alagasco sold $6,391,000, $8,100,000 and $7,926,000,
respectively, of installment receivables. At September 30, 1999 and 1998, the
balance of these installment receivables was $15,690,000 and $17,105,000,
respectively. Receivables sold under this agreement are considered financial
instruments with off-balance sheet risk. Alagasco's exposure to credit loss in
the event of non-performance by customers is represented by the balance of
installment receivables.

CONCENTRATION OF CREDIT RISK: Natural gas distribution operating revenues and
related accounts receivable are generated from state-regulated utility natural
gas sales and transportation to approximately 470,000 residential, commercial
and industrial customers located in central and north Alabama. A change in
economic conditions may affect the ability of customers to meet their
obligations; however, Alagasco believes that its provision for possible losses
on uncollectible accounts receivable is adequate for its credit loss exposure.

10. RECENT PRONOUNCEMENTS OF THE FASB
================================================================================

In fiscal 1999, the Company adopted SFAS No. 130, Reporting Comprehensive
Income, which requires the reporting and display of comprehensive income and its
components in an entity's financial statements. There currently are no
differences between the Company's net income and comprehensive income. The
Company also adopted SFAS No. 132, Employers' Disclosures about Pensions and
Other Postretirement Benefits, which revises employers' disclosures about
pensions and other postretirement benefit plans. This pronouncement relates
solely to disclosure provisions and has no effect on the results of operations
or financial position of the Company.


                                       35
<PAGE>   36
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which establishes accounting and reporting
standards for derivative instruments. The Company is required to adopt this
statement in fiscal year 2001. The impact on the Company currently is being
evaluated.

11. SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following data summarize quarterly operating results. Alagasco's business is
seasonal in character and strongly influenced by weather conditions.


<TABLE>
<CAPTION>
================================================================================
Fiscal year 1999 quarters (in thousands)     First    Second    Third    Fourth
--------------------------------------------------------------------------------
<S>                                         <C>      <C>       <C>      <C>
Operating revenues                          $71,557  $144,692  $63,296  $46,009
Operating income (loss)                     $ 5,579  $ 28,158  $ 2,613  $(2,948)
Net income (loss)                           $ 2,855  $ 25,198  $   507  $(5,263)
--------------------------------------------------------------------------------
Fiscal year 1998 quarters (in thousands)
--------------------------------------------------------------------------------
Operating revenues                          $95,755  $161,747  $66,327  $46,111
Operating income (loss)                     $ 4,798  $ 26,393  $ 1,631  $(2,559)
Net income (loss)                           $ 2,183  $ 23,946  $  (586) $(4,956)
--------------------------------------------------------------------------------
</TABLE>


12. TRANSACTIONS WITH RELATED PARTIES
================================================================================

Alagasco purchased natural gas from affiliates amounting to $3,232,000,
$4,142,000 and $5,165,000, in 1999, 1998 and 1997, respectively. These amounts
are included in gas purchased for resale. Alagasco had net receivables from
affiliates of $20,654,000 at September 30, 1999 and net payables to affiliates
of $2,738,000 at September 30, 1998.







                                       36

<PAGE>   37


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

TO THE BOARD OF DIRECTORS OF ENERGEN CORPORATION:

Our audits of the consolidated financial statements referred to in our report
dated October 27, 1999, appearing in the 1999 Annual Report to Shareholders of
Energen Corporation (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, the financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.



PricewaterhouseCoopers LLP
Birmingham, Alabama
October 27, 1999




























                                       37
<PAGE>   38

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
ENERGEN CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>
================================================================================

YEARS ENDED SEPTEMBER 30, (IN THOUSANDS)          1999        1998        1997
================================================================================
<S>                                            <C>         <C>         <C>

ALLOWANCE FOR DOUBTFUL ACCOUNTS
BALANCE AT BEGINNING OF YEAR                   $ 3,547     $ 3,185     $ 3,002
--------------------------------------------------------------------------------

    Additions:
     Charged to income                           6,121       3,472       1,837
     Recoveries and adjustments                   (244)       (215)       (186)
--------------------------------------------------------------------------------

       Net additions                             5,877       3,257       1,651
--------------------------------------------------------------------------------

    Less uncollectible accounts written off     (3,826)     (2,895)     (1,468)
--------------------------------------------------------------------------------

BALANCE AT END OF YEAR                         $ 5,598     $ 3,547     $ 3,185
================================================================================
</TABLE>












                                       38
<PAGE>   39

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
ALABAMA GAS CORPORATION


<TABLE>
<CAPTION>
================================================================================
YEARS ENDED SEPTEMBER 30, (IN THOUSANDS)         1999        1998        1997
<S>                                            <C>         <C>         <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
BALANCE AT BEGINNING OF YEAR                   $ 3,482     $ 3,156     $ 2,985
--------------------------------------------------------------------------------

     Additions:
       Charged to income                         5,105       3,430       1,575
       Recoveries and adjustments                 (244)       (215)       (186)
--------------------------------------------------------------------------------

          Net additions                          4,861       3,215       1,389
--------------------------------------------------------------------------------

    Less uncollectible accounts written off     (3,811)     (2,889)     (1,218)
--------------------------------------------------------------------------------

BALANCE AT END OF YEAR                         $ 4,532     $ 3,482     $ 3,156
================================================================================
</TABLE>


















                                       39