Topeka, KS-based Western Resources Inc. said it is planning to sell its $960 million stake in Tulsa-based Oneok. Western subsidiary Westar Industries has engaged JP Morgan to advise it in the sale of 4.7 million shares of Oneok common stock and preferred stock that is convertible into 39.9 million additional shares of Oneok common stock, representing about 44.5% of total Oneok shares. Oneok is a midstream gas transporter in the Midcontinent region and the largest natural gas distributor in Kansas and Oklahoma, operating as Kansas Gas Service and Oklahoma Natural Gas, which serve 1.4 million customers. Western Resources has total assets of $6.6 billion, including security company Protection One and electric utility Westar Energy, which serves 640,000 customers in Kansas.

Williams has agreed to become the operator of Discovery Producer Services LLC and Discovery Gas Transmission LLC, a gas gathering and processing system in southeastern Louisiana and offshore Gulf of Mexico. Williams owns a 50% stake in the Discovery assets. Texaco was the previous operator but is divesting its 33.3% ownership stake to Duke Energy Field Services to satisfy a condition from the Federal Trade Commission for closing the merger between Texaco and Chevron. The Discovery infrastructure consists of the following: a 105-mile, 30-inch-diameter mainline that reaches the edge of the Outer Continental Shelf at Ewing Bank 873, delivering natural gas to onshore delivery points; 112 miles of gathering laterals, including one that reaches Green Canyon 254 in 3,200 feet of water; 600 MMcf/d cryogenic gas processing plant near Larose, LA; a 42,000 b/d gas liquids fractionator near Paradis, LA; and a fixed-leg platform at Grand Isle 115. Discovery is one portion of Williams’ overall gathering and processing portfolio in the Gulf. The company recently completed construction of a new 300 MMcf/d gas processing plant in Markham, TX, and new oil and gas pipelines that serve the Nansen and Boomvang deepwater fields in the western Gulf. Williams also has a 600 MMcf/d gas plant in Coden, AL, a 500 MMcf/d gas plant in Cameron Parish, LA, and is completing a 500 MMcf/d production-handling facility known as Canyon Station in East Main Pass 261 south of Mobile Bay.

Hong Kong-based Brek Energy Corp. and individual shareholders have agreed to exchange their equity position in Gasco Energy for up to 30% of Gasco’s interest in oil and gas acreage. Brek is acquiring approximately 50,000 net acres in two Rocky Mountain basin-centered natural gas accumulations. Under the terms of the agreement, Brek will tender 500 shares of Gasco preferred stock and 4.8 million shares of Gasco common stock, and individuals investors will tender 1.5 million shares of Gasco common stock in exchange for 25% of Gasco’s acreage, plus an option to earn a further 5% upon completion of a 10-well drilling program. Furthermore, Brek said it has entered negotiations with the individual shareholders to acquire their respective acreage position in exchange for Brek Shares. The companies will identify the acreage to be conveyed to Brek and the individual shareholders before the agreement is completed. Gasco currently owns more then 115,000 gross acres in the Uinta Basin of Utah and has 120,000 net acres in the Greater Green River Basin of Wyoming. In pursuing this agreement, Brek said it will not pursue the agreements it had entered into previously with various Gasco shareholders to acquire seven million shares in Gasco in exchange for 19.3 million Brek shares.

SG Resources Mississippi filed an application with the Federal Energy Regulatory Commission to build a new salt dome storage facility in Greene County, MS. The Southern Pines Energy Center initially would have 12 Bcf of working gas capacity but could be expanded to 16 Bcf. The company said so far it has a signed contract with one customer for 3 Bcf of capacity. The project initially will be connected to Destin Pipeline, but additional interconnections are planned with Transcontinental Gas Pipe Line, Florida Gas and Gulf South. The Southern Pine salt dome will have two storage caverns capable of delivering 1.2 Bcf/d of gas. The maximum injection rate of the field will be 600 MMcf/d. SGR is proposing market-based rates for storage services. It has asked FERC for approval in time to provide initial services in December 2003.

Houston Exploration said it will maintain its 2002 capital budget of $250 million, about 20% of which will go toward developing South Texas properties the company is buying from Burlington Resources, and it expects to increase its production this year by 14% to about 290 MMcfe/d. The company expects to produce 99 to 105 Bcfe in 2002 from its existing fields and from properties brought online during 2002, which will include the Burlington properties. Daily rates for the second quarter will average 270 to 280 MMcfe/d. In the second half of the year, with planned drilling and development in South Texas, the company anticipates production volumes to average 280-290 MMcfe/d. Its hedged volumes for the remainder of 2002 total 190,000 MMBtu/d with an average effective floor of $3.40 and an average effective ceiling of $4.83. Hedged volumes represent 65% of its estimated production volumes for the year. Houston Exploration also said it expects annual earnings to increase to $2.60 to $2.70 per fully diluted share, utilizing an average Nymex gas price for 2002 of $3.38/MMBtu. The current average of Wall Street estimates is $2.08. Cash flow is expected to increase to $9.00 to $9.35 per fully diluted share. Excess cash flow above capital requirements will be used to reduce debt.

©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.