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Industry Briefs

Industry Briefs

Domestic natural gas demand next year will surpass the 22 Tcf mark for the first time since 1972, the Independent Petroleum Association of America (IPAA) forecasts. The higher anticipated demand, which the producer group pegged at 22.56 Tcf, will be spurred by growth in the industrial and residential sectors, with demand for the former expected to be up 2.5% to 9.14 Tcf and demand for the latter up by 2.1% to 5 Tcf. The IPAA anticipates a similar 2.1% growth for the commercial sector to 3.3 Tcf, but demand by electric utilities - where the gas industry is pinning much of its hopes for the future - is likely to tumble by 1% to 3.18 Tcf next year. It forecasts about another 1.94 Tcf will be consumed as lease and plant fuel and pipeline fuel. Demand will outstrip domestic supply of dry natural gas, which is predicted to increase by 1% to 18.94 Tcf next year. The majority of the U.S. gas production will be in the Gulf of Mexico, the group said. Gas imports will account for about 3.94 Tcf, up 5.7% from 2000. For oil and natural gas liquids (NGLs), the IPAA estimated domestic production will increase slightly to 7.83 million barrels per day, while imports will hit 11.30 million b/d. U.S. consumption of oil and NGLs will rise by 1.3% to 19.87 million b/d.

The BP Amoco and Atlantic Richfield Co. (ARCO) merger is officially complete. BP Amoco will deliver to former ARCO holders, for each share of common stock owned, 1.64 American depositary shares (ADS) of BP Amoco. Alternatively, if properly elected, ARCO common stock holders can receive BP Amoco ordinary shares. Cash will be paid for fractional share interests. BP Amoco ADSs trade on the New York Stock Exchange and other North American exchanges under the symbol BPA with one ADS representing six ordinary shares traded on the London Stock Exchange. Existing BP Amoco ADR holders and existing ARCO preference stock holders do not need to take any action with respect to this transaction.

EnergyPrism.com Inc., a business-to-business e-commerce company focusing on the global energy industry, formed eight new business-to-business e-commerce marketplaces. They add to the New York City-based company's upstream petroleum marketplace (now named OilPrism.com), which was launched in September. Each marketplace will be tailored to the needs of various sectors of the global energy industry. The marketplaces will serve refining and processing, service stations, electric power, local gas distribution, lubricants, petroleum shipping, energy employment and staffing and commodity supplies. EnergyPrism.com will roll out the new web sites by the end of April. Each new marketplace will offer content, community and information on the leading energy companies and suppliers in each sector. For more information about EnergyPrism.com, visit www.energyprism.com.

AES Corp. of Arlington, VA, announced a 2-for-1 stock split. Each shareholder of record on May 1 will receive as a dividend one additional share of AES common stock for each share held on that date, payable on June 1. AES is a leading global power company with competitive generation, distribution and retail supply businesses in Argentina, Australia, Bangladesh, Brazil, Canada, China, Dominican Republic, El Salvador, Georgia, Hungary, India, Kazakhstan, the Netherlands, Mexico, Pakistan, Panama, the United Kingdom and the United States. The company's generating assets include interests in one hundred and twenty-five facilities totaling more than 44 gigawatts of capacity.

Petroleum Place Inc., of Englewood, CO, said wholly owned subsidiary, The Oil & Gas Asset Clearinghouse LP, a Houston-based provider of live, oral bid auctions of oil and gas properties, will hold its first Internet-only auction of producing oil and gas royalty interests May 8 - 10, 2000. The auction will consist of 65 lots owned by the Permian Basin Acquisition Fund (PBAF) based in Midland, TX. Bidding will be open from 8 a.m. May 8 through 10 a.m. May 10. Beginning at 10 a.m. May 10 lots will begin closing in sequential order. To register as a bidder, visit www.petroleumplace.com or www.ogclearinghouse.com. Property data and auction registration can be viewed at either site by clicking on "auction info" and providing a client number and password. For information or assistance in registration or setting up a client number/password, contact The Clearinghouse, (281)873-4600 and ask for bidder registration.

Nevada Power filed a motion in Nevada State District Court in Carson City asking the court to halt an order by the Public Utilities Commission of Nevada (PUCN) to lower the utility's electricity rates in southern Nevada. Last month the utility filed a petition with the state court to reverse the PUCN's March 27 order to reduce rates for fuel and purchased power to serve Southern Nevada electric customers. Today's filing of a "motion for injunctive relief" is the next step in the normal progression of that lawsuit. The motion asks the court to immediately put into effect a $110 million rate request filed by Nevada Power on Sept. 30, 1999. That request was dismissed in February by the PUCN, which later ordered the rate reduction. The rate request is for fuel and purchased power expenses previously incurred to serve Nevada Power's 567,000 electric customers in southern Nevada, and adjusts future rates to reflect ongoing higher costs for fuel and purchased power. Even with the increase, Nevada Power's rates still would be the lowest in the Pacific Southwest, according to Doug Ponn, vice president of regulatory and governmental affairs. "Prices we pay for fuel to operate our power plants are affected by the same factors that have driven up gasoline prices," Ponn said. "Motorists are paying more at the gas pump to drive their cars, and utilities are paying more for natural gas to run their electric generators." Nevada Power Company and Sierra Pacific Power Co. are the principal subsidiaries of Sierra Pacific Resources.

Aspen Group Resources Corp. (formerly Cotton Valley Resources) is now trading under its new corporate name and symbol effective April 17 on the OTC Bulletin Board. The shareholders of Aspen Group Resources approved the name change at the meeting held February 28, and the shares now trade under the new name, and under the new symbol, ASRG. The Company currently owns interests in approximately 500 wells and an equivalent number of offset locations in eight states with a predominant focus in Oklahoma and Texas.

Plug Power Inc. signed a joint development agreement with Axiva GmbH, Frankfurt, Germany, to develop a high temperature membrane electrode unit (MEU) that is expected to simplify Plug Power's residential fuel cell systems and decrease their costs. Axiva's MEU will enable Plug Power's fuel cell systems to operate reliably at temperatures above 120oC. This high operating temperature improves fuel cell tolerance to certain pollutants, enables the user to effectively utilize the heat so that system efficiency is increased, and reduces overall system complexity by simplifying the fuel processor. "Our development efforts are targeted at reducing cost, size and weight, so that it will be commercially attractive," said Gary Mittleman, Plug Power president and CEO. "This agreement puts us another step closer to that goal."

PPL Corp. announced that its PPL EnergyPlus subsidiary is now supplying electricity to business customers in Maine. PPL Corp. has been part of the Maine business community for nearly a year. In 1999, a subsidiary company purchased 89 MW of generating assets in Maine from Bangor Hydro-Electric Co., as well as transmission rights in Maine to import electricity from Canada. PPL EnergyPlus is an electricity supplier now serving customers in four states with competitive electricity markets: Pennsylvania, New Jersey, Delaware and Maine. In 1999, it sold more than 10 billion kWh of electricity to industrial, commercial and institutional customers. PPL EnergyPlus also can provide natural gas supply to businesses and, through affiliated companies, offers a full range of energy-related services. At this time, PPL EnergyPlus is not making offers to residential customers in Maine. Businesses in Maine can learn more about PPL EnergyPlus by visiting the company's web site: www.pplenergyplus.com . Electric choice began in Maine on March 1.

Reliant Energy Thermal Systems, an unregulated affiliate of Reliant Energy's Retail Group, is providing energy management services to the Astrodomain Complex for SMG/LMI, contractor to the Harris County (TX) Management Corp. The stadium and exhibition complex is made up of Houston's Astrodome, Astrohall and AstroArena. SMG/LMI contracted with Reliant Energy Thermal Systems for an initial three-year period to provide operation and maintenance of the cooling and heating plants, including HVAC (heating, ventilation, and air-conditioning) systems; maintenance of the plumbing, electrical, and lighting systems; and utility management and new plant consulting services. The effective date of the contract was April 1, with renewal options. Other terms are not being disclosed.

MDU Resources Group, Inc. said its subsidiary, WBI Holdings, Inc., bought 1 Tcf of coal-bed methane gas reserves, production facilities, 187,000 acres of properties and a Powder River Basin gathering system in Wyoming from Preston, Reynolds & Co., Inc. The acquisition is expected to be accretive to MDU earnings in the first year. Financial details were not disclosed. The effective date of the deal was April 1. Redstone Gas Partners, LLC, a subsidiary of Preston, Reynolds & Co. and the operator of all the leasehold positions, is included in the acquisition. The existing management and operating teams at Preston, Reynolds & Co. and Redstone are being retained. "This acquisition makes us a substantial player in one of the most rapidly developing and exciting natural gas exploration and production regions in the onshore United States," stated John K. Castleberry, president and chief executive officer of WBI Holdings, Inc. "The management team of Redstone Gas Partners, LLC, was one of the first operators to successfully develop coal bed methane reserves and production and, as a result, has a strong geologic and hydrologic understanding of the development."

BP Amoco has become the latest producer to shell out big bucks to settle whistle-blower claims for underpayment of royalties on oil production during the past decade. It has agreed to pay $32 million as part of a settlement with the Department of Justice (DOJ), joining the ranks of other oil producers - Mobil Oil ($45 million), Oxy USA Inc. ($7.3 million), Chevron ($95 million) and Conoco Inc. ($26 million). Two whistle-blowers alleged that BP and Amoco underpaid their royalties prior to their merger. The complaint against BP and Amoco was filed in a federal court in Lufkin, TX, where a number of other cases alleging underpayment of royalties on natural gas production are pending as well. The DOJ already has intervened in three civil lawsuits accusing affiliates of ExxonMobil Corp., Shell Oil Co. and Burlington Resources Inc. of "knowingly undervaluing" their royalties on gas, and it has indicated it is investigating other gas-royalty cases. The two whistle-blowers who initiated the complaint against BP and Amoco under the False Claims Act will share more than $5.4 million of the settlement proceeds.

ABN AMRO Inc. completed the transfer of the energy futures and options business from Merrill Lynch. About 30 people, including three principals from Merrill Lynch, have joined ABN AMRO's global energy futures group in New York and London. John Hill, Richard Redoglia and Richard Kane have joined Richard Schaeffer as co-directors of the global energy futures business. ABN AMR, a subsidiary of ABN AMRO Bank NV, is a full-service investment banking, advisory and brokerage firm.

Altra Energy Technologies Inc., chose TIBCO Software Inc. to support its growing business-to-business electronic marketplace. TIBCO's real-time software helps power some of the world's leading energy firms, including Enron, Dynegy, Coral Energy, ExxonMobil, Williams, Endesa and Centrica. Using the scaleable TIBCO ActiveEnterprise e-business product suite, Altra Energy is now able to support an unlimited number of traders on its Altrade electronic marketplace, a real-time, anonymous marketplace where customers meet on-line to trade natural gas, crude oil, natural gas liquids and power. TIBCO ActiveEnterprise also allows Altra to offer users constantly updated trading applications through their Web browsers, making it easy and convenient for traders to participate in Altra's e-commerce community. In the $340 billion-a-year energy market, Altra's energy trading is now approaching the $1.5 billion-a-month mark. According to Forrester Research, an industry research firm, Altra's 1999 level of $9 billion in energy trading represented more than 20% of North America's total 1998 e-commerce volume. TIBCO's e-business infrastructure is helping Altra meet these demands for its services.

Occidental Petroleum announced net income of $271 million for the first quarter compared with a net loss of $70 million for the first quarter of 1999. Earnings before special items were $264 million compared with a loss of $68 million for the first quarter of 1999. "Our strong first quarter performance was driven by record quarterly profits from oil and gas and the strong recovery of our chemical business," said CEO Ray R. Irani. "This year's first quarter chemical earnings of $143 million virtually equaled the 1999 total year chemical earnings before special items of $147 million.

National Fuel Gas Co. reported earnings of $71.1 million for the second quarter ended March 31, compared with $61.1 million for the same quarter last year. The increase was the result of higher earnings in exploration and production, utility, timber and energy marketing. Higher earnings were offset in part by lower earnings in the international and pipeline and storage segments. In the E&P segment, earnings were $7.9 million, up $7.8 million. Significantly higher oil and gas prices were the main reasons for the increase. Weighted average prices (after hedging) for oil and gas production increased 77% and 23%, respectively.

Financial Briefs

Semco Energy reported net income of $12.0 million or $0.67 per share for the first quarter of the year a 12% increase from the $0.60 per share on net income of $10.4 million for the first quarter of 1999. "We are off to a good start in meeting our goals for the year, despite the third year in a row of warmer than normal weather," said CEO William L. Johnson. "Had temperatures for the period been normal, we would have reported record first quarter earnings of approximately $0.82 per share in 2000 compared to weather-normalized earnings of $0.63 per share in 1999." The increase in earnings was attributable primarily to higher earnings from gas distribution, offset partially by seasonal losses from its construction business. Volumes of gas sold and transported increased from 25.2 Bcf in the first quarter of 1999 to 39.3 Bcf in the first quarter of 2000. The increase is attributed primarily to the operations of the recent acquisition in Alaska offset partially by the impact of warmer weather. Temperatures for the first quarter of 2000 were 11% warmer than normal and also warmer than the first quarter of 1999 when temperatures were 2% warmer than normal.

Chicago-based Nicor Inc. reported first quarter 2000 diluted earnings per common share of $0.83 on net income of $38.8 million. This compares to $0.82 per share on net income of $39 million in 1999. Operating income was $70.2 million compared with $65.4 million a year ago. Improvements in gas distribution and shipping operating results were offset by reductions in nonoperating contributions. Per share results for the period were favorably affected by the company's common stock repurchase program. Gas distribution operating income increased to $65 million from $61.6 million a year ago. The increase in operating income reflects the positive effect of customer additions and contributions from the performance-based rate plan on gas supply costs. Although weather was 10% warmer than last year, its adverse effect on operating results was partially mitigated by the company's weather insurance, which protects earnings to the extent that weather is more than 6.5% warmer than normal. "On an operating basis, our primary businesses showed improved results in the first quarter 2000 compared to the same period last year," said Thomas L. Fisher, chairman, president and chief executive officer. "We believe this trend will continue for the remainder of the year and expect significant earnings per share growth for the full year."

Seattle-based Cascade Natural Gas reported a 24% improvement in second quarter earnings per share over second quarter 1999 results. Net earnings available to common shareholders for the quarter ended March 31 were $9,866,000, or $0.89 per share, compared to $7,900,000, or $0.72 per share for the second quarter of fiscal 1999. The primary reason for the 24% growth in earnings was a $3.3 million increase in operating margin for the most recent quarter. Major contributors were operating margin from residential and commercial customers was up $2.2 million with $940,000 due to the addition of 7,900 new customers since March 31, 1999, and $1.3 million resulting from increased per customer consumption, which can be attributed, in large part, to weather that was about 7% colder this year vs. last year. Temperatures for the most recent quarter were essentially equal to the long term average or normal. Operating margin from industrial customers was higher by $1 million with half the increase contributed by electric generation customers, $174,000 from new customers, and the remainder from higher deliveries to other industry categories. Cascade provides gas service to more than 187,000 customers in the states of Washington and Oregon.

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