South Jersey Gas (SJG) posted a gas sendout record over the Jan. 29-30 weekend because of teeth-chattering cold temperatures averaging 17 degrees and blizzard conditions. Most folks in New Jersey apparently stayed home for the weekend and cranked up their heat. The utility company set a record for a three-day sendout at 1,197,580 decatherms of gas, which broke the prior record of 1,159,578 decatherms set Jan. 23-25 last winter. "Despite consistently cold weather, our portfolio of gas supplies was more than sufficient to meet our customers' needs," said Ed Graham, president of SJG. "We employ a prudent natural gas supply strategy which allows us to handle extreme winter temperatures like those recently affecting our region." SJG has invested $380 million during the last eight years to improve its delivery system and infrastructure and because of growing demand on its system. The company serves 311,000 residential, commercial and industrial customers in seven New Jersey counties.
Dynegy completed its purchase of ExRes SHC Inc., the parent company of Sithe Energies Inc. and Sithe Independence LP, from Exelon Corp. The puchase includes the 1,021 MW combined-cycle Independence power generation facility in Scriba, NY, four gas-fired merchant facilities in New York and four hydroelectric generation facilities in Pennsylvania. It also includes a 750 MW firm capacity sales agreement with Con Edison through 2014 that will provide Dynegy with annual cash receipts of $100 million. Power tolling and financial swaps between Sithe and another Dynegy subsidiary have become intercompany agreements, eliminating the financial impact of these contracts, Dynegy said. Dynegy is paying $135 million in cash and will assume $919 million in project debt, most of which will be funded with proceeds from the long-term capacity sales contract with Con Edison. "The completion of this transaction provides multiple strategic and financial benefits for Dynegy, including the addition of new generation capacity in an attractive U.S. region where the company has a strong, existing presence and the mitigation of a legacy tolling agreement that minimizes corporate cash outflows," said Dynegy CEO Bruce A. Williamson. "In addition, the debt obligations associated with the acquisition are largely covered by a long-term capacity contract with an investment-grade counterparty, enabling Dynegy to maintain its disciplined focus on capital expenditures that are in the best interest of our shareholders." The assets increase Dynegy's net generating capacity in the Northeast to more than 3,000 MW.
CenterPoint Energy, which serves about five million natural gas customers in Texas, Arkansas, Louisiana, Mississippi and Oklahoma, said last week residential customers may expect to see gas bills fall as much as 15%, or about $7.65, in the next few weeks as part of a gas cost adjustment. The drop in prices is based on a monthly usage of 4 Mcf of gas. Customers who use 10 Mcf will save about 17%, or about $20 a month, CenterPoint said. CenterPoint last lowered its gas costs in August 2002. There were two rate increases last year. "This is a good time to pass along savings to our customers since gas usage is higher at this time of year due to heating needs," said Georgianna Nichols, president of Houston gas operations for CenterPoint. She said the adjustment reflects fluctuations that the company pays in the marketplace for gas.
Energen Corp. is forecasting earnings in the range of $4.65-4.85/share in 2006, assuming that average New York Mercantile Exchange prices for unhedged natural gas will average $6.15/Mcf and oil production will average $35/bbl. Energen has hedged 10% of its estimated 2006 gas production and increased its oil hedge position. Included in the company's 2006 guidance is an estimated 16 cents per diluted share from unidentified oil and gas property acquisitions of approximately $200 million each in 4Q2005 and 4Q2006. Energen's 2006 production is forecast to total approximately 101 Bcfe, which is broken down as 65.6 Bcf of gas, including 6.9 Bcf from unidentified acquisitions in 2005 and 2006; and 3.8 million bbl of oil, including 0.3 million bbl from unidentified acquisitions in 2005 and 2006. The company added its first natural gas hedges for 2006, selling contracts for approximately 5.9 Bcf (0.49 Bcf per month) of San Juan Basin-specific gas at a Nymex-equivalent price of $6.52/Mcf. It also has doubled its oil hedge position for 2006 with the addition of contracts for 360,000 bbl (30,000 bbl per month) of sour oil at a Nymex-equivalent price of $43.41/bbl.
Calgary-based Esprit Energy Trust, a spin off from the former Canadian 88 Energy Corp. (see NGI, Sept. 6, 2004), said that even though 2004 oil and natural gas output was lower from a year earlier, it still replaced 121% of its production on a proved basis, 110% on a total proved basis and 104% on a proved-plus probable basis in 2004. In 4Q2004, Esprit's output averaged 11,161 boe/d, down from the 12,709 boe/d in 4Q2003. Quarterly production was lower than expected because of what the company called "operational reliability issues and restrictions" at its Olds field. Esprit also blamed higher-than-expected initial declines at three new wells at High River, which came on stream in the final quarter. "The principal operational issues at Olds have involved the plant's current ability to deal with increasing volumes of natural gas liquids in the production and difficulties with the main compressor on the southern gathering system, which has resulted in downtime and ongoing throughput restrictions," Esprit said in a statement. Esprit is now forecasting production for 2005 of 11,000 boe/d, down from an original guidance of 11,600 boe/d. Major plant maintenance will shut down the Olds facility in May. Once that is completed, the company said it expects to return to "more normal levels" and average 11,600 boe/d in the last six months of 2005. This type of maintenance shutdown at Olds is scheduled to occur every three years.
Oklahoma City-based Devon Energy had a banner year in 2004, posting sharply higher earnings and showing solid reserves and production growth. The company's net income was up 25% for the year to $2.2 billion ($4.38/share compared to estimates of $4.27) and net income in the fourth quarter rose 24% to $673 million ($1.35/share) compared to $543 million ($1.16/share) in 4Q2003. "Devon delivered record-breaking performance in 2004, from nearly every perspective," said CEO J. Larry Nichols. "Record production of 251 million boe and rising oil and gas prices led to record net earnings and earnings per share. "Furthermore, with drill-bit capital of $2.8 billion we added 313 million bbl of proved reserves, before price revisions. Simultaneously, the company reduced net debt by $1.8 billion with free cash flow. Devon is clearly performing at a very high level and we couldn't be more enthusiastic about our future." In 2004, the company's production rose 10% to 1.5 Tcfe, wholesale gas prices were up 14% and crude oil prices rose 33%. Devon's domestic natural gas production was up 2% for the year to 1,642 MMcf/d, but down 7% for the quarter to 1,619.7 MMcf/d. Lehman Brothers analyst Thomas Driscoll said Devon's fourth quarter earnings beat his forecast of $1.23 and the consensus estimate of $1.20. Devon's production beat the Lehman Brothers projection by 0.7%.
Duke Energy met analysts' earnings estimates for the quarter and beat estimates for the year by about 3 cents/share. The company reported earnings per share of $1.59 ($1.49 billion in net income) compared to a loss of ($1.48) per share in 2003, or a $1.32 billion loss. Ongoing basic earnings per share for 2004, excluding special items, were $1.38 versus $1.28 in 2003. Earnings in the fourth quarter were $0.38 per share, or $358 million, compared to a loss of ($2.23) per share, or a $2.02 billion loss, in the fourth quarter 2003. Excluding special items, ongoing basic earnings per share for fourth quarter 2004 were $0.24 versus $0.22 in fourth quarter 2003. "In 2004, we regained control of our own destiny," said CEO Paul Anderson. "We exceeded the 2004 targets we set to rebuild our financial strength and finished this year in the driver's seat to pursue new growth opportunities. We maintained our dividend, exceeded our goals in reducing debt and asset sales, and improved our merchant operation. As we move into 2005, we will build on those accomplishments and continue to fine-tune our portfolio."
Bill Barrett Corp. announced that it had proved reserves of 292.3 Bcfe (88% natural gas) at the end of last year, which was up 43% over the 2003 levels. The present value of the reserves, discounted at 10% and without deducting any future income taxes, is $592.4 million using year-end realized prices of $5.52/MMBtu and $43.46/bbl. The net reserve addition of 119.8 Bcfe replaced 378% of 2004 oil and gas production. Total 2004 oil and gas production was 31.7 Bcfe, with fourth quarter production of 8.1 Bcfe. The company produced an average of 91.3 MMcfe/d in December 2004, compared to 71.7 MMcfe/d in December 2003. The increased daily production was attributable to drilling and development programs in the Wind River, Powder River, Uinta, and Williston Basins, coupled with the acquisition of producing properties in the Piceance Basin. The Denver-based production company is expecting to produce 37-40 Bcfe of gas and oil this year on a capital expenditure budget of about $276 million.
Atmos Energy began a rebranding of TXU Gas Co. on Feb. 1. The Texas utility company, its customers' bills, employees' uniforms, vehicles, buildings, forms, stationery, pipeline markers and website will all will have the new name Atmos Energy. "We want the transition for TXU Gas customers to be smooth and transparent," said Atmos CEO Robert W. Best. "We purposively have delayed making major changes to ensure stability in the operations and to prepare for rebranding the business under our own name." Atmos completed its purchase of TXU Gas and began serving customers on Oct. 1, 2004. The transaction made Atmos Energy the largest gas distribution company in the nation, serving about 3.1 million utility customers in more than 1,500 communities in 12 states . TXU Gas' operations include service to 1.5 million utility customers in the Dallas-Fort Worth Metroplex and 550 other communities across northern Texas. The company also operates one of the largest intrastate natural gas pipelines in the state. Duke Energy Field Services LLC http://www.defs.com.
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