Kimball Trading Files for Bankruptcy

Houston-based Kimball Trading and Kimball Trading Canada of Calgary, two of the Kimball Companies, last week filed for Chapter 11 bankruptcy protection in Houston. The move caused market repercussions last Thursday, the day after the filing, as Kimball halted gas flows to customers. The bankruptcy filings do not involve the related Kimball Resources or the other Kimball Companies.

Kimball seeks to combine the two filings. The Kimball Trading Co. filing lists 40 creditors, the largest being Howard/Avista Energy, owed nearly $7.24 million; Aquila Energy Marketing, nearly $4.54 million; Carthage Energy Services, about $3.44 million; PG&ampE Energy Trading Gas-Corp., about $3.2 million; and Coral Energy Resources, about $2.9 million. The filing lists debts totaling more than $35.33 million and assets of $43.96 million, more than $39 million of which is accounts receivable.

The Kimball Trading Canada filing lists 10 creditors, the largest being Duke Energy Marketing, nearly $1.39 million; ProGas USA, $461,949; PG&ampE Energy Trading, $92,744; Kimball employee Trevor Dillabough, $60,000; and Black Hills Energy Resources, $59,652. The filing lists debts totaling nearly $2.08 million and assets of $1.83 million, nearly all accounts receivable.

Kimball Trading is a significant player in Dawn, ON, and Michigan markets and was described by one trader as an "extremely big wholesaler" with physical trading volumes in the hundreds of MMcf/d. The trader said the bankruptcy filing has disrupted Michigan markets. "That's why we're such big buyers at the Michigan citygate today. This could rival the significance of the GasMark failure of several years ago. I think we're at the top of their list of creditors."

Clearly, Kimball's stumble could snag some of its business partners, particularly the smaller ones, a trader noted. "It can certainly drag another company under. This is especially the case if you were a smaller company -- without a major parent company to bail you out -- and you're out a large amount of money for over a year because of their bankruptcy then it is pretty much certain doom."

There also were reports of much confusion at MichCon and Consumers Power Thursday because Kimball had cut off gas flows.

"Kimball was selling us Transco Station 65 baseload [for March] at an index price of $1.63," a marketer said. He had to replace the gas Thursday at $1.87, "which made us quite happy, of course," he said sarcastically.

Two sources told NGI they did not deal with Kimball because the company refused to post letters of credit. A Midcontinent marketer said his firm ceased business with Kimball about two years ago because his credit risk department recommended it; "I guess that was a good call by our credit guys." A Calgary trader reported hearing that one of Kimball's main problems was putting a lot of gas into storage in Michigan last year without hedging it. "Now they're pulling it out at much lower prices than they paid for it," she added.

Calls to Kimball were referred to a company representative who did not return several calls.

Joe Fisher and Roger Tanner, Houston; Firas Barazi

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