Conoco Extends Supply Deal With DuPont
Continuing an arrangement first forged in 1981, Conoco announced a definitive
agreement last week to manage DuPont's gas supply needs. DuPont is one
of the largest U.S. industrial gas consumers and Conoco's largest supply
customer. Neither the financial terms nor energy volumes were disclosed.
"After taking a hard look at our natural gas supply requirements
and evaluating several competing bids, we came to the conclusion Conoco
provides the most competitively priced and reliable natural gas supply
services available," said Sam Hamdan, DuPont's director-raw materials,
energy and packaging.
The two-year agreement calls for Conoco Gas Marketing to provide all
natural gas supply services for all 31 DuPont plants. Conoco has managed
DuPont's industrial natural gas needs for purchasing, scheduling, dispatching,
transporting, balancing and accounting for 18 years. DuPont originally
divested the energy company in May of 1998 (see NGI, May
18, 1998), and was officially separated from Conoco last August.
While Conoco's energy management operations received a nice boost, the
company's core production operations also appear to be in good shape. The
deal was announced just a few weeks after the company said stronger gas
prices and increased production in 3Q99 will cause earnings to be in a
range of about 4 to 7 cents higher than First Call's current consensus
estimate of 33 cents of underlying earnings per share. The company's earnings
are set to be released next week.
"Our ongoing goal is to deliver industry-leading production growth,
which we estimate to be between 4 to 5%/year on average," said Rob
McKee, executive vice president for worldwide upstream operations. "Between
1998 and 2001, our growth plans will exceed this goal, reaching a total
of about 22%. For the first nine months of 1999, our early production estimates
indicate that our worldwide natural gas production will be up about 23%."
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