The Indiana Utility Regulatory Commission (IURC) approved a $24 million base rate increase for Vectren Energy Delivery of Indiana - North's gas distribution business. The new rates took effect on Wednesday. The increase covers the ongoing cost of operating, maintaining and expanding the company's 12,000-mile distribution and storage system, which is used to serve 525,000 customers. It results in a 3.5% increase in average residential bills. The ruling also sets an authorized return on equity (ROE) of 10.6%, an overall cost of capital of 8.38%, a return on a $708 million rate base, a new rate design that includes a larger monthly customer charge to address earnings volatility related to weather; and a pilot program and market study to determine potential benefits associated with gas demand side management programs.
Pioneer Drilling signed an agreement to purchase five drilling rigs and related equipment from Allen Drilling Co. for $7.2 million in cash. Allen Drilling owns a yard in Woodward, OK, and operates a fleet of five mechanical 550-800 horsepower rigs, capable of drilling to depths of 6,000 to 10,000 feet. Dixon Allen, president of Allen Drilling, will become Pioneer's Oklahoma division manager. Pioneer CEO Stacy Locke said, "Allen Drilling has operated in the northern Anadarko shelf of Oklahoma since 1976 and has built an excellent reputation and a loyal customer base." Pioneer also completed the previously announced acquisition of seven drilling rigs and related equipment from Wolverine Drilling Inc., based in Kenmare, ND. In addition, Pioneer signed a one-year daywork contract for its 1,000 hp electric rig, which is in the final stages of construction. The rig will be mobilized to Utah in mid-December and will be operated by the North Dakota Division.
Leveraged buyout firm Hicks, Muse, Tate & Furst Inc. completed its purchase of Regency Gas Services LLC of Dallas in a transaction valued at $405 million, according to an announcement by Charlesbank Capital Partners, which provided initial funding for Regency's formation last year and its acquisitions of gas gathering and processing assets from El Paso and Duke Energy Field Services (see Daily GPI, Nov. 3). Regency was formed by Charlesbank and a group of experienced energy industry operators, including David Biegler, former vice chairman of TXU and Jim Bryant, formerly CEO of Endevco. Regency operates midstream gas gathering, processing and transmission assets in North Louisiana, West Texas and the Midcontinent region. The company's pipeline systems, anchored by contractual relationships with more than 500 producers, connect approximately 2,800 wells to nearly 3,000 miles of pipeline with current throughput of 450 MMcf/d. Its processing plants have aggregate capacity of 330 MMcf/d.
Vintage Petroleum closed its previously announced sale of its wholly-owned Canadian subsidiary, Vintage Petroleum Canada Inc. (VPC) to Midnight Oil and Gas Ltd. for US$275 million. VPC holds all of Vintage's properties in Canada and had estimated working capital of US$22 million as of the transaction's June 30 effective date. At year-end 2003, Vintage disclosed estimated proved reserves in Canada of 14.6 million boe. Vintage said proceeds from the sale will be used to reduce debt. CEO Charles C. Stephenson said the sale would result in "reducing our net debt-to-book capitalization ratio below the 40% range, thus achieving our stated financial target, and the enhancement of our flexibility to fund future production growth." National Park Service BNP Petroleum Corp.
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