With the economy slowly pulling itself out of recession, some natural gas marketers reported significant trading increases while some reported equally significant decreases in 4Q2009, according to NGI's 4Q2009 Top North American Gas Marketers Ranking.
The 22 reporting marketers for the quarter that also participated in the 4Q2008 survey transacted 121.6 Bcf/d in 4Q2009, a decrease of less than 1% compared with the 122.8 Bcf/d they reported in the year-ago period. Marketers had reported a 4% decline from 3Q2008 to 3Q2009.
BP plc, still the top marketer in the survey, reported physical sales of 29 Bcf/d, an 11% decline from 32.50 Bcf/d in 4Q2008. Shell Energy North America (US) LP remained in second place in the survey, with a 12% increase to 15.50 Bcf/d compared with 13.80 Bcf/d in 4Q2008, and ConocoPhillips reported 14.10 Bcf/d in 4Q2009, unchanged from 4Q2008. For the second consecutive quarter privately held Louis Dreyfus Highbridge Energy had one of the largest increases in the survey, up 1.39 Bcf/d (19%) to 8.65 Bcf/d in 4Q2009 compared with 7.26 Bcf/d in 4Q2008. Louis Dreyfus reported a 25% increase in NGI's 3Q2009 survey.
It is unclear whether the near-flat results reported for 4Q2009 mark a transition to improved numbers that would come from an improving economy or are the precursor of another marketing decline. The Energy Information Administration recently projected that marketed natural gas production will see a steep drop of 3% in 2010 because of the lag time arising from low drilling rates last year and steep decline rates associated with newly drilled wells (see NGI, March 15). But the agency cautioned that this could be subject to change depending on the recovery in rig activity and production rates from shale gas wells.
|2.||Shell Energy NA||15.50||13.80||12%|
|4.||Macquarie Cook Energy*||10.27||n/a||n/a|
|10.||EDF Trading NA||4.05||n/a||n/a|
Source: Quarterly financial reports with the Securities and Exchange Commission, or if necessary, statements signed by company officials and provided to NGI. Some previous-year data has been updated by the companies since it was originally reported.
Companies providing data directly to NGI include BP, Chevron, Citigroup, ConocoPhillips, EDF Trading NA (formerly Eagle Energy Partners), JP Morgan, Louis Dreyfus, Merrill Lynch, RBS Sempra, Shell Energy and Tenaska. *Macquarie Cook integrated Constellation Energy's gas trading business into its operation at the beginning of April 2009. No combined data is available for 4Q2008. Macquarie Cook Energy data reflects Macquarie Cook Energy LLC's transactions in the United States and Macquarie Cook Energy Canada's transactions in Canada. **The gas volume figures for Apache, Chesapeake, Devon, EnCana, ExxonMobil and XTO represent the amount of North American gas produced in the quarter. Those companies may be marketing more third-party gas for sale.
The Baker Hughes Rotary Rig Count showed an increase of just one drilling rig to 927 seeking natural gas in the U.S. during the week ending March 12. Six units were added to the Gulf of Mexico search, Baker Hughes said. Its latest tally was 4% higher than a month ago and, continuing to show an increase from the year-ago level begun in 3Q2009, was up 5% from the previous year. The number of drilling rigs seeking natural gas in the U.S. trended upward during 3Q2009, from a low of 665 in mid-July to a high of 710 at the end of September, according to Baker Hughes, which reported rig counts as high as 1,606 in 3Q2008. The steep dropoff in rig counts over the past year in part is reflective of economic turbulence and the resulting decline in demand, as well as the current overabundance of gas in storage.
Which direction the market takes next could be influenced by a flood of production from shale plays, according to Houston Energy Partners co-manager John Olson.
"I think there is continued debate between the bulls and the bears about just how fast marketed gas production will be coming down because of the rapid decline curves behind shale gas," Olson told NGI. "The problem is that so far the bears have been more right than wrong because there's been so much new production capacity coming on stream, even in the face of a massive amount of inventory runoff due to the cold weather surges that we've had around the country.
Near-month natural gas futures prices in 4Q2009 showed marked gains. From Oct. 1 to Dec. 31, 2009, the front-month value climbed 73 cents from $4.841 to $5.572, which reflects the colder weather of the winter heating season. Since then, the prompt-month price has backed off considerably, closing at $4.169 on Friday.
"So much more deliverability will be developed by these people in the shale gas plays, simply because they're drilling to earn their acreage or hold the acreage, hold the leases."
Companies that covered production losses with hedging profits last year might soon lose that resource, Olson said.
"Many of the producers which reported very good earnings in 2009 benefited from considerably higher hedging prices. XTO Energy, for example, on average last year lost about $300 million per quarter producing oil and gas. But because they had brilliant hedges out there, they reported about $1 billion a quarter of hedging profits, so when you add the two together they reported about $700 million each quarter in profits. But those hedges are going to be going away in 2010 and 2011," Olson said. "XTO was brilliantly hedged -- not good, but brilliantly hedged -- with under $20 crude and $10 gas. You cannot get that in 2010 or 2011. With more people more naked than they like, it's going to be another interesting year."
ExxonMobil Corp. advanced the cause for North American natural gas in December after agreeing to pay $41 billion to acquire XTO (see NGI, Dec. 21, 2009). The agreement would add around 45 Tcfe to ExxonMobil's resource base and lift its gas weighting to 45%. XTO reported 2.37 Bcf/d in 4Q2009, up 9% compared with 2.17 Bcf/d in the previous year period; ExxonMobil reported 1.92 Bcf/d marketed in 4Q2009.
Highlights of NGI's 4Q2009 Top North American Gas Marketers Ranking include the addition of Citigroup, which reported 1.89 Bcf/d for 4Q2009. At the beginning of the quarter Los Angeles-based independent Occidental Petroleum Corp. (Oxy) signed an agreement to purchase Phibro LLC, Citigroup Inc.'s commodities trading unit, for approximately $250 million (see NGI, Oct. 12, 2009). Phibro trades natural gas in all U.S. regions, with a particular focus on the Gulf Coast and the Northeast. Phibro enters into transactions on CME Group's New York Mercantile Exchange, IntercontinentalExchange Futures Europe and in the over-the-counter physical, swaps and options markets.
The largest percentage increase in the survey was reported by Sequent, which saw a 27% jump to 3.44 Bcf/d in 4Q2009, up from 2.70 Bcf/d in 4Q2008. In December Sequent Energy Management LP closed a deal involving the purchase of substantially all of Integrys Energy Services Inc.'s wholesale natural gas marketing business (see NGI, Dec. 14, 2009). The transaction did not include or directly affect the retail gas and electric marketing business operated by Integrys Energy Services. The second part of the two-part transaction, scheduled to be completed by next month, will include 11.5 Bcf of storage contracts. Houston-based Sequent is a subsidiary of Atlanta-based AGL Resources.
Calgary-based Encana reported 2.69 Bcf/d in 4Q2009, a 10% decline compared with 2.98 Bcf/d in 4Q2008, and also reported a 3% decline in its full-year 2009 average. EnCana became a pure-play North American unconventional gas producer beginning in December after splitting off its integrated oil assets to form Cenovus Energy Inc. (see NGI, Dec. 7, 2009). EnCana recently reported 4Q2009 production and earnings pro-forma, reflecting performance as if the split-off had occurred before 2009 to clearly differentiate between the two businesses.
Highlights of NGI's Full Year 2009 Top North American Gas Marketers Ranking included XTO's 23% growth from 1.91 Bcf/d during 2008 to 2.34 Bcf/d for 2008 and Sequent's 14% jump from 2.60 Bcf/d in 2008 to 2.96 Bcf/d in 2009. It was the second year of significant increase for XTO, which reported a 31% increase in 2008 compared with 2007. Shell reported a 4% jump from 14.18 Bcf/d in 2008 to 14.70 Bcf/d in 2009 and Anadarko reported an 11% jump from 2.05 Bcf/d in 2008 to 2.28 Bcf/d in 2009. The 24 marketers participating in the survey during the full year 2009 reported a total of 123.13 Bcf/d.
|Company||Full Year 2009||Full Year 2008||Change|
|2.||Shell Energy NA||14.70||14.18||4%|
|9.||EDF Trading NA||3.33||n/a||n/a|
Source: Annual and quarterly financial reports with the Securities and Exchange Commission, or if necessary, statements signed by company officials and provided to NGI.
Companies providing data directly to NGI include BP, Citigroup, Chevron, ConocoPhillips, EDF Trading NA (formerly Eagle Energy Partners), JP Morgan, Louis Dreyfus, Merrill Lynch, RBS Sempra, Shell Energy and Tenaska. *The gas volume figures for Apache, Chesapeake, Devon, EnCana, ExxonMobil and XTO represent the amount of North American gas produced in the year. Those companies may be marketing more third-party gas for sale.
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