NGI The Weekly Gas Market Report / NGI All News Access

Industry Briefs

Industry Briefs

Stamford, CT-based Energy East Corp. said that its merger with CTG Resources Inc. is close to completion and an exchange of shares or cash is expected soon. Based on preliminary results, ChaseMellon Shareholder Services, which is acting as exchange agent, will adjust the cash portion Energy East's offer by a factor of 0.99. In exchange for each share of CTG common stock, CTG shareholders had the option to receive either $41 in cash or a number of shares of Energy East common stock valued at $41. Energy East expects ChaseMellon to begin distributing cash and stock soon. Questions regarding the exchange may be directed to ChaseMellon at (888) 581-9932.

Atlantic LNG Company of Trinidad and Tobago has decided to use Phillips Petroleum's liquefied natural gas (LNG) technology to develop two additional trains at an LNG manufacturing facility in Trinidad. The first train at the center, also using Phillips' technology, produces three million metric tons of LNG per year. Trains two and three will each produce 3.3 million metric tons per year. Phillips' LNG process uses propane, ethylene and methane to cool and compress natural gas into a liquid state. Bechtel, the company that constructed the first train, will also construct train two and three. Train two is expected to be in service as towards the end of 2002, with train three following in the Fall of 2003.

Cambridge Energy signed a letter of intent to acquire oil and gas properties in Southern Louisiana from private individuals with significant proven, probable and exploratory reserves. The company said the overall value of the acquisition is $10 million. Based upon a review of engineering reports on the property, Cambridge energy believes that the property has 2.2 million bbl of recoverable oil reserves and 11.3 Bcf of gas reserves. 1.7 million bbl of oil and 1.8 Bcf of gas have been proven. This marks Cambridge Energy's second oil and gas acquisition in Southern Louisiana within the last three months (see Daily GPI, June 14). The company is involved in oil & gas exploration with producing properties in Louisiana and Indonesia.

Independent oil and gas operator Central Resources entered into two definitive sale agreements to sell specific oil and gas properties and related facilities located in West Texas, the mid-continent and Rockies areas, the four corners area and along the Texas, Louisiana and Mississippi Gulf Coast. Total proceeds from the sale are estimated at $70 million. Denver-based Central Resources CEO Paul Zecchi said the company will use the cash proceeds on "future acquisition and development opportunities" domestically as well as internationally. The sale transactions were effective on June 1, and are expected to be completed in mid-to-late September.

San Francisco-based myHomeKey.com and partners KeySpan Corp. and TXU Energy Services have launched two co-branded customized sites to provide access to reach up to 10 million new customers for online access to home management services. The free sites, designed for KeySpan and TXU energy customers, will link consumers across the United States with more than 15,000 local service providers and more than 1,000 brand appliances companies, including home repair and upkeep, home monitoring and control, neighborhood and community notification, utility/energy services, purchased appliances and move management. For more information visit the web sites at www.keyspan.myhomekey.com or www.txu.myhomekey.com.

Calgary-based Precision Drilling Corp. will acquire 100% of the common shares of CenAltra Energy Services Inc. under an agreement announced last Monday. If all goes to plan, Precision would have the largest fleet of service rigs in the Western Canadian Sedimentary Basin, which already is the largest oilfield service company in Canada. Precision has offered 0.1432 common shares of Precision for each common share of CenAltra, subject to a condition that at least 66 2/3% of CenAltra's shares be tendered in the offer. CenAltra's board unanimously approved the offer, and has recommended that its shareholders do the same. The acquisition agreement provides that CenAltra will not solicit other offers, allows Precision to match any subsequent offers and provides for a non-completion fee of $8.8 million payable to CenAltra to Precision in certain circumstances. The takeover bid is expected to be mailed to CenAltra shareholders by Sept. 22.

Coral Power LLC will supply the natural gas and collect the power output of a 900 MW generating station to be built and operated by Tenaska Alabama II Partners L.P., a limited partnership comprised of affiliates of Tenaska Inc. The two companies announced they had executed an energy conversion agreement for the facility to be located near Billingsley, AL. Coral plans to market the power throughout the Southeast. It is the second of this type of agreement between Coral and Tenaska. The first was signed in August, 1999 for an 845 MW Tenaska Gateway Generating Station in Rusk County, TX. The initial financing process for the project will begin early next year with construction slated to begin in the summer of 2001 and be completed for summer 2003.

Denver-based Kestrel Energy Inc. reported a 390% increase in its total proved gas reserves to 24.5 Bcf and a 34% increase in its oil reserves to 387,000 bbl compared with the same time period last year. For the reporting period ending June 30, Kestrel reported that its proved developed producing net gas was 4.76 Bcf; proved developed non-producing, 3.87 Bcf; proved undeveloped, 15.89 Bcf; and probable net gas was 9.04 Bcf. Total proved plus probable was 33.56 Bcf. Most of the increases in the reserves came from the Greens Canyon project in Wyoming, where Kestrel is averaging 500 to 700 Mcf/d.

With the FERC's approval handed down in late July, and post merger execs already named, the union between NiSource and Columbia Energy Group should be completed by late October the companies said. Columbia shareholders were given the choice of whether they wanted to exchange their shares for New NiSource shares or the combination of cash and New NiSource Stock Appreciation Income Linked Securities (SAILS). SAILS have zero coupon debt security and a forward equity contract. Columbia shareholders will receive a package in the mail detailing their choices. The companies said shareholders who wish to opt for the New NiSource stock deal must submit their election forms and stock certificates so that the exchange agent, ChaseMellon Shareholder Services, receives them no later than 5 p.m. EST on the second business day before the merger becomes effective. Elections are subject to proration, and conditioned on Columbia shareholders electing stock for at least 10% of the outstanding Columbia shares.

ALSTOM ESCA Corp. teamed with Andersen Consulting to bring the electricity markets of Texas an advanced market and operations system for both wholesale and retail marketplaces. ALSTOM ESCA will assist ERCOT markets through the use of its product e-terra market, which manages scheduling, pricing, dispatch, market clearance, congestion management, web portal and other energy management functions. Andersen Consulting will design, develop and implement the infrastructure necessary for a reliable and robust competitive electricity market in Texas. "This new system significantly impacts the restructured electricity market. It assists customers in managing their energy services," said Russ McRae, account executive at ALSTOM ESCA.

Calgary's Genesis Exploration Ltd. is increasing its exploration and development program 14%, to $125 million through the end of this year, up from its previously announced $110 million, to parallel the cash flow from oil and natural gas revenues. The increase is expected to add about 2,000 boe/d, up from its previous estimate of 17,500 boe/d. Donald Sabo, chairman, said that the current economic climate has been "exceptionally favorable" for Genesis, and said that the company has a high quality prospect inventory and healthy balance sheet to help it expand. Additional seismic, land acquisition and infrastructure activity is slated for the liquids rich natural gas prospects in the West Central region, and drilling next year also will be accelerated. At its Grouard prospect, Genesis plans to increase its development drilling to 19 wells on nine pads.

News Flash! Energy companies can be fun too. Such is the case involving Williams employees, who according to the company, will attempt to complete the largest money raising bike ride fundraiser in the United States. Some 80 cyclists will embark on a relay-style 2,000 mile journey departing from New York City on Sept. 25 and arriving at Williams Tower in Houston on Oct. 3. In the second annual "Williams' 2000 Riding The Line" fundraiser, each rider will cover approximately 60 to 70 miles a day, roughly tracing the path of the company's Transco natural gas pipeline and telecommunications network. The fundraiser hopes to raise $5 million for United Way, which if successful will be the single largest event in the charity's 110-year history. The team raised more than $2 million dollars in the ride's inaugural year.

Chesapeake Energy announced it had entered into a definitive plan of merger with Gothic Energy on Monday, taking the preliminary agreement announced on June 30 to the next stage. The cash and stock transaction estimated at $345 million is expected to be completed on or about Jan. 15, 2001, pending regulatory approvals and a Gothic shareholders vote. The company estimates that preferred stock exchanges, earnings and common stock issuance in the Gothic transaction will increase common shareholders' equity by $800 million in 2000.

On the strength of rising natural gas prices and a revenue windfall, the Alberta government is paying down its debt and has committed C$690 million to an "energy tax refund" that will go to payments of about C$300 each to every one of an estimated 2.3 million taxpayers resident in the province as of Aug. 31. Another C$240 million will be doled out to power consumers in utility rebates of $C20 each to compensate for rising electricity prices under a provincial deregulation scheme. The provincial government said that rising natural gas prices --- now forecast to average C$4.27 (US$2.94) per Mcf this year, or C$1.77 more than the treasury predicted in the spring --- account for C$2.98 billion (US$2 billion) or 68% of a C$4.4 billion windfall jump in Alberta resource royalty revenues to C$8.5 billion this year. Alberta has earmarked C$4.5 billion for debt repayments to bring the province within about two years of being debt-free if the bonanza lasts.

Allegheny Energy Supply Co. LLC upped its total generating capacity last week to nearly 10,000 MW after setting up a joint venture with UGI Development. The deal will expand and market generation output from facilities at UGI's Hunlock Creek generating station near Wilkes-Barre, PA, and gives Allegheny Energy Supply access to 46 MW to sell into the Pennsylvania-New Jersey-Maryland market. Under the agreement, Allegheny Energy Supply, the unregulated generating subsidiary of Allegheny Energy Inc., and UGI Development, a subsidiary of UGI Corp. will share 48 MW of existing coal-fired generation at Hunlock Creek. Allegheny Energy also will install a 44 MW natural gas-fired combustion turbine (CT) on the property owned by UGI, and then the two companies will share jointly in the output of the units. The CT is one of five General Electric LM6000 units bought recently by Allegheny Energy Supply. UGI will continue to operate the facility, and the unit is expected to begin commercial operations by the end of this year. Earlier this year, Allegheny Energy Supply established its presence in the PJM, announcing it would purchase 50% of Potomac Electric Power Co.'s 166-MW share of the Conemaugh generating station located near Johnstown, PA in a partnership with PPL Global Inc. The sale is expected to close before the end of the year.

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.